Dave was born to Mary and Michael Foley. He is the second of three children. At the age of 17 he dropped out of an "alternative" High School, and began taking classes at Second City in Toronto.

While in Toronto Dave met Kevin McDonald, a fellow usher at a local art house movie theater. Together Kevin and Dave formed the original Kids in the Hall.

In October of 1989 Kids in the Hall debuted on TV, with a cast of Dave, Kevin, Bruce McCulloch, Mark McKinney, and Scott Thompson. Some of Dave's famous characters include Hecubus, one of the Sizler sisters, the A. T. & Love boss, Bruno Puntz Jones, Mr. Heavyfoot, Jocelyn, and Lex. The show ended in April 1994 and Dave moved on with his career.

Paul Simms, creator of NewsRadio, happened to be a huge fan of Foley. The role of Dave Nelson was created specifically for him, but because Dave had accepted a job on another sitcom he turned it down. Eventually he was fired from the other sitcom and he took the role on NewsRadio, a show about the staff at a news station in New York City.

Dave has also had several roles in movies. The best known was the voice of Flik in A Bugs Life. As well, Dave did the voices for the Baldwin Brothers in South Park: Bigger, Longer, and Uncut.

Dave married his now ex-wife, Tabitha Southey, on December 31, 1991. They met at a bar when Dave was 20 and she was 17. According to Dave, the relationship began right after being introduced when they argued over whether the lead vocalist of the group the Psychedelic Furs was a good singer. Tabitha and Dave divorced in 1997 after 6 years of marriage. Together they had two sons, Edmund "Ned" Foley (born 1991) and Basil Patrick Southey (born 1995).

Dave remarried on August 1, 2002 to Crissy Guerrero and they have a daughter named Alina Chiara Foley (born April 16, 2003).