A self-taught chef, Patterson was born in Lynn, Massachusetts. He began working as a restaurant dishwasher at age 14, and attended Duke University before dropping out. In 1989 he moved to Sonoma, California and opened Babette's, a French-inspired restaurant, in 1994 at age 25. Wine Spectator described it as a "top" restaurant in the town.

Coi, which he opened in 2006, earned two Michelin stars, and was one of several restaurants in the San Francisco Bay Area to earn four stars from the San Francisco Chronicle. Patterson describes its concept as combining haute cuisine, an emphasis on local vegetables, a modern aesthetic, and a personal approach to cooking, with "a casual, neighborhood feeling". The approach was uncommon at the time, but later became a hallmark of Northern California restaurants. His cooking at Coi involved foraging for wild ingredients, using aromas and essential oils (including asking patrons to rub grapefruit oil on their hands before a dish, or placing inedible fragrant flowers on a dish), and making his own ingredients.
He opened an informal rotisserie, Il Cane Rosso ("the red dog" in Italian), in the San Francisco Ferry Building with co-owner Lauren Kiino, before selling the business to her entirely. He opened restaurants Plum in Uptown Oakland in 2010 and Haven in Oakland's Jack London Square in 2012. In 2017, Patterson partnered with LA chef Roy Choi to open the fast food concept restaurant Locol, which received the LA Times Restaurant of the Year award.

Patterson also writes about food. He is an occasional contributor to New York Times Magazine, Food & Wine Magazine, and San Francisco Magazine.In 2004 he wrote ‘The Magic of Essential Oils in Food and Fragrance’ together with co-author Mandy Aftel. "To the Moon, Alice" (a reference to Alice Waters of Chez Panisse) published in 2005, generated considerable controversy for criticizing the tendency of San Francisco restaurants to copy the Chez Panisse style and approach, which he said resulted in self-righteousness over ingredients and a lack of creativity, complexity, or technical finesse. He also criticized San Francisco diners for avoiding food they considered too fancy, while paying similar prices for restaurants that featured home-style cooking, as a form of affected populism.

Patterson lives in Oakland, California, and is married to litigation attorney Alexandra Foote.

2019 marks the first year of Daniel Patterson's participation as a judge in The Art and Olfaction Awards. He will serve as a judge for the Aftel Award for Handmade Perfume.