McMahon was born in Sydney, the son of Sir William McMahon, a prominent Australian politician, and Lady McMahon (née Sonia Hopkins), a socialite and fashion icon. His father was a Member of the Australian House of Representatives and a high-ranking minister in the 24-year Liberal Government for many years before Julian’s birth; he became the 20th Prime Minister of Australia in March 1971, when Julian was two years old. His mother left their three children in the care of a nanny to be with her husband in Canberra during his Prime Ministership. He has an older sister, Melinda, and a younger sister, Deborah. He is of Irish descent through his father.

In addition to modelling, he began an acting career in commercials, including one for Levi Strauss jeans. From 1989–91, McMahon starred in the successful Australian television soap opera Home and Away, playing the soldier Ben Lucini, alongside Dannii Minogue, his then future wife (now former wife). He was one of several Home and Away cast members to star in a stage musical about the soap, which toured the United Kingdom in 1991.

He co-starred in 2011 with Milla Jovovich in Julien Magnat’s thriller Faces in the Crowd.