In 1976, Baio played the title character Bugsy Malone in the cult children’s gangster musical directed by Alan Parker, which also co-starred Jodie Foster. Baio and Foster later worked together again in the teen girl drama Foxes (1980), helmed by Adrian Lyne. When he was 16, Baio was then cast as The Fonz's cousin Chachi Arcola on Happy Days. During his time on Happy Days, Baio earned two Emmy Award nominations for his lead performances in the television movies Stoned (1981) and All the Kids Do It (1985). He won two Young Artist Awards during the Third Annual Youth in Film Awards (1980–1981) as Best Young Actor in a Television Special for Stoned and Best Young Comedian in Television or Motion Pictures for Happy Days. He also starred in the made-for-television youth drama specials The Boy Who Drank Too Much with Lance Kerwin and Senior Trip with Mickey Rooney.
In 1982, Baio was in a spin-off of Happy Days entitled Joanie Loves Chachi with Erin Moran, which lasted 17 episodes. That same year, he appeared opposite another actor, Willie Aames, in the film Zapped!, and recorded an album for RCA (he also recorded a second album The Boys Are Out Tonight the following year). During this same period, he also starred with Danny Aiello and undertook the lead role of Francis Geminiani in the special HBO cable television presentation of "Gemini", an adaptation of the Broadway comedy-drama "Happy Birthday, Gemini" by the award-winning playwright Alberto Innauranto. From 1984 until 1990, Baio starred in the syndicated comedy series Charles in Charge. In 1985, he was part of an ensemble cast for Alice in Wonderland, where he portrayed Pat the Pig. From 1987 through 1991, he was a director of the children's comedy series Out of This World.
During the 1990s, Baio appeared in various television programs, including the short-lived Look Who's Talking small screen spin-off Baby Talk. In 1991, he joined Diana Muldaur and Ally Walker in the NBC Monday Night Movie Perry Mason and the Case of the Fatal Fashion, as a young prosecutor. Between 1992 and 1995, he portrayed Dr. Jack Stewart in the medical mystery series Diagnosis: Murder starring Dick Van Dyke. Baio was a guest-star on many series, including Full House, Touched by an Angel, Veronica's Closet and The Nanny. He was also in a number of television series and commercials. He also starred in several films on television and video releases such as Detonator, Bar-Hopping, Dumb Luck, Face Value and Danielle Steel's Mixed Blessings. Baio's other movies include the independent films Very Mean Men, Face to Face and The Bread, My Sweet.
Very Mean Men (2000) was a comedy directed by Tony Vitale about a mob war between two families. Baio served as a co-producer with his older brother Steven on said film, and even played the crucial role of impetuous crime scion Paulie Minnetti who unwittingly instigates the crime feud. Variety praised his performance: "A career-reviving turn by Scott Baio."
Face to Face (2001; renamed Italian Ties) was a comic drama directed by Ellie Kanner about three young men (Scott Baio as Richie, Thomas Calabro as Philly and Carlo Imperato as Al) who kidnap their emotionally distant fathers for a weekend of genuine bonding. Baio co-wrote the screenplay with Jeffrey Gurian. The movie won the Audience Prize for Best Comedy at the Marco Island Film Festival, the Silver Screen Accolade in the Reno Film Festival and the 10 Degrees Hotter Best Feature Award during the Valley Film Festival.
The Bread, My Sweet (2001; retitled A Wedding for Bella) a romance film directed by Melissa Martin and produced by Adrienne Wehr. Baio portrayed Dominic Pyzola who is both a corporate raider in the daytime and a pastry chef at night. He earned three Best Lead Actor prizes in the Atlantic City Film Festival, the Kansas City Halfway to Hollywood Film Festival and the San Diego Film Festival. The movie itself collected top accolades from the Santa Monica, Stony Brook, Marco Island, Houston World fest and Iowa Hardacre Film Festivals. In 2005, Baio played himself in the Wes Craven film Cursed.
Baio was also in the Emmy Award winning comedy series Arrested Development as the madcap Bluth family's serious but overpaid lawyer, Bob Loblaw (pronounced similar to "Ba-bla-bla, a running joke). He took over the role of the clan's legal counselor from former Happy Days co-star Henry Winkler in four episodes: "Forget Me Now", "Notapusy", "Mr. F" and "Making a Stand". The Online Film and Television Association nominated him as Best Guest Actor in a Comedy Series. In August 2006, Baio was formally invited by the AIA Actors Studio to discuss his professional experiences in television and movies. He talked about his own acting career plus his recent forays into writing, directing and producing. In 2007, Baio starred in the successful VH1 celebrity reality series Scott Baio Is 45...and Single and its successor the following year, Scott Baio Is 46...and Pregnant.
Baio was also the co-host of the VH1 reality show Confessions of a Teen Idol, in which former teen idols attempt to resurrect their careers. He is now the star and producer of a new situation comedy for Nick at Nite entitled See Dad Run, about a former-actor-turned-stay-at-home-dad. It debuted on October 6, 2012.
In 2007, Baio married his longtime girlfriend Renee Sloan. In July 2007, he told E!: Entertainment Television's Ted Casablanca that they were expecting a baby girl in December. Initially pregnant with twins, Renee lost one of the babies at 11 weeks gestation. Their daughter, Bailey, was born in 2007, five weeks premature. The family has started the Bailey Baio Angel Foundation to provide financial support to other families who are dealing with metabolic disorders.