A left-handed top order batsman, Khawaja was awarded Player of the Australian Under-19 Championship in 2005 and also played for Australia in the 2006 U-19 Cricket World Cup in Sri Lanka as an opening batsman.

He made his first-class debut for the New South Wales Blues in 2008. In the same year, he hit consecutive double centuries for the NSW Second XI—a feat never before achieved by a NSW player. On 22 June 2010 it was announced by Cricket Australia that Usman Khawaja would be a part of the Australian touring squad to play Pakistan in a two Test series in England.

Since 2011, Khawaja has played for the Sydney Thunder in the Big Bash League. In BBL05, he was the second highest run scorer (345 runs) and averaged 172.50 runs per match.

Khawaja signed a contract to play for county side Derbyshire in the 2011 English domestic season. He played in four County Championship matches, averaging 39.87 with the bat and scoring a century (135) against Kent. After his county stint, he made five further Test appearances in 2011, scoring one half-century (65) against South Africa. He was dropped from Australia’s Test team after the home series against New Zealand, making way for Shaun Marsh upon Marsh’s return from injury.

Khawaja was selected as part of the 17-man Australian squad for the 2010–11 Ashes series. During the third Test, Ricky Ponting fractured his finger and Khawaja was named as a stand-by if Ponting could not recover in time. He was subsequently selected in the Australian cricket team to play in the fifth Test against England in Sydney on 3 January 2011. On 3 January 2011, Khawaja became the 419th Australian to be presented with an Australian Cricket Test baggy green cap. Khawaja became the first Muslim and first Pakistani-born Australian player to play Test cricket for Australia, and only the seventh foreign-born cricketer to do so in the last 80 years.

Before the third Test against India in March 2013, Australia suspended Khawaja, along with James Pattinson, Shane Watson and Mitchell Johnson following a breach of discipline. Michael Clarke, the captain, revealed that the step had been taken as a result of repeated infractions which led to Watson flying back home and contemplating Test retirement. Some former players reacted with astonishment at the decision taken by the team management. Khawaja made his Test return in the second Test of the 2013 Ashes series, replacing Ed Cowan.

During the 2015–16 season, Khawaja was in spectacular form for Australia and his domestic T20 franchise the Sydney Thunder, with many pundits hailing his renaissance as a batsman since being dropped from the Australian team in 2013 and recovering from an injury in 2015. He also switched to using Kookaburra equipment.

In August 2015, Khawaja was appointed as captain of the Queensland cricket team, replacing previous captain James Hopes.

In his first Test in more than two years, he scored his maiden Test century, in the first Test against New Zealand on 5 November 2015, in which he scored 174 with 16 fours and 2 sixes. He made this return in his tenth Test in the coveted number 3 position, helping Australia to an emphatic victory.

He made his Twenty20 International debut for Australia against India on 31 January 2016.

Khawaja played his first Test match against the country of his birth, Pakistan, on 15 December 2016 at the Gabba. When asked about the significance of the match, he described a moment of confusion outside the change rooms:

Khawaja was born in Islamabad, Pakistan, and his family emigrated to New South Wales when he was 5. He became the first Australian of Pakistani origin to represent Australia when he made his debut in the 2010–11 Ashes series. He is a qualified commercial and instrument-rated pilot, completing a bachelor’s degree in Aviation from the University of New South Wales before he made his Test debut. He attained his basic pilot licence before his driving licence. He was educated at Westfields Sports High School. Usman Khawaja announced his engagement on 14 December 2016 on his Facebook page. and subsequently married his wife Rachel on 6 April 2018. Rachel Khawaja (née McLellan) converted to Islam prior to their wedding.

In January 2017 Khawaja dabbed in celebration of his half-century scored in a Test match against Pakistan in Sydney. His move received mixed reactions, with some praising it, while others accused him of disrespecting his opponents.

In April 2018, he was signed by Glamorgan County Cricket Club to play in the 2018 Vitality Blast tournament in England.

In April 2018, he was awarded a national contract by Cricket Australia for the 2018–19 season. He played a match saving innings against Pakistan in the first test in 2018 at Dubai.

In April 2019, he was named in Australia’s squad for the 2019 Cricket World Cup. In Australia’s final group-stage match, against South Africa, Khawaja picked up a hamstring injury, ruling him out of the rest of the tournament. Matthew Wade was named as cover for him.

In July 2019, he was named in Australia’s squad for the 2019 Ashes series in England. In the series, he returned the scores of 13, 40, 36, 2, 8 and 23, failing to convince. Therefore, for the fourth Ashes Test, Steve Smith replaced Khawaja after returning from concussion, whilst Marnus Labuschagne retained his place in the side.

On 16 July 2020, Khawaja was named in a 26-man preliminary squad of players to begin training ahead of a possible tour to England following the COVID-19 pandemic He was not included in the final squad for the tour.