In addition to performing, Hattie was also a songwriter, a skill she honed while working with her brother's minstrel show. After the death of her brother Otis in 1916, the troupe began to lose money, and it wasn't until 1920 that Hattie got her next big break. During 1920–25, she appeared with Professor George Morrison's Melody Hounds, a touring black ensemble, and in the mid-1920s she embarked on a radio career, singing with the Melody Hounds on station KOA in Denver. In 1926–1929 she also recorded many of her songs on Okeh Records and Paramount Records in Chicago. In all, McDaniel recorded seven sessions; one in the summer of 1926 on the rare Kansas City label Meritt; four sessions in Chicago for Okeh (late 1926-late 1927) – of the ten sides, only four were issued, and two sessions in Chicago for Paramount (both in March 1929).
When the stock market crashed in 1929, the only work McDaniel could find was as a wash-room attendant and waitress at Club Madrid in Milwaukee. Despite the owner's reluctance to let her perform, McDaniel was eventually allowed to take the stage and she soon became a regular.
In 1931, McDaniel made her way to Los Angeles to join her brother Sam and sisters Etta and Orlena. When she could not get film work, she took jobs as a maid or cook. Sam was working on KNX radio program called The Optimistic Do-Nut Hour, and he was able to get his sister a spot. She appeared on radio as "Hi-Hat Hattie", a bossy maid who often "forgets her place". Her show became extremely popular, but her salary was so low that she had to continue working as a maid.
Her first film appearance was in The Golden West (1932) as a maid; her second was in the highly successful Mae West film I'm No Angel (1933), as one of the black maids West camped it up with backstage. She received several other uncredited film roles in the early 1930s, often singing in choruses.
In 1934, McDaniel joined the Screen Actors Guild (SAG). She began to attract attention and finally landed larger film roles that began to win her screen credits. Fox Film Corporation put her under contract to appear in The Little Colonel (1935), with Shirley Temple, Bill "Bojangles" Robinson and Lionel Barrymore. In 1935 McDaniel had prominent roles with her performances as a slovenly maid in RKO Pictures' Alice Adams, a comic part as Jean Harlow's maid/traveling companion in MGM's China Seas, the latter her first film with Clark Gable, and as Isabella the maid in Murder by Television with Béla Lugosi. She also appeared in the 1938 film, Vivacious Lady, starring James Stewart and Ginger Rogers.
McDaniel had a featured role as Queenie in Universal Pictures's 1936 version of Show Boat, starring Irene Dunne, and sang a verse of Can't Help Lovin' Dat Man with Dunne, Helen Morgan, Paul Robeson, and the African-American chorus. Later in the film she and Robeson sang I Still Suits Me, a song written especially by Kern and Hammerstein for the film.
After Show Boat she had major roles in MGM's Saratoga (1937), starring Jean Harlow and Clark Gable, The Shopworn Angel (1938) with Margaret Sullavan, and The Mad Miss Manton (1938), starring Barbara Stanwyck and Henry Fonda. She had a very minor role in the Carole Lombard/Frederic March vehicle, Nothing Sacred (1937), in which she appeared as the wife of a shoeshine man (Troy Brown), masquerading as a sultan.
It was around this time that she began to be criticized by members of the black community for the roles she chose to accept and for her decision to pursue roles aggressively rather than rock the Hollywood boat. For example, in The Little Colonel (1935) she played one of the black servants longing to return to the Old South. But McDaniel's portrayal of Malena in RKO Pictures's Alice Adams angered white Southern audiences; she had stolen several scenes away from the film's white star, Katharine Hepburn. McDaniel would ultimately become best known for playing a sassy and opinionated maid.