Townsend debuted onscreen at age 17 in Cooley High (1974), but then stopped acting. In his early 20s he performed stand-up and improvisational comedy with Chicago's Second City troupe, then joined the Experimental Black Actors Guild. He appeared in a half-dozen films in the first half of the '80s, then made his name as the producer, director, co-writer, and star of Hollywood Shuffle (1987), a humorous look at the problems encountered by black actors; the film has become a legend for its unconventional financing -- half the budget was supplied by credit cards and much of the film was donated. He also directed the Eddie Murphy concert film, Raw (1987), the highest-grossing concert film in screen history. He produced, directed, wrote, and starred in The Five Heartbeats (1991), and wrote, directed, and starred in Meteor Man (1993); both films performed poorly at the box office. He also starred in the short-lived TV sketch-comedy series "Townsend TV."