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Playfair was educated at Harrow and University College, Oxford. He starred in the Mermaid Society's well-received 1904 London production of The Way of the World by William Congreve and went on to produce a modern run twenty years later at The Lyric with Edith Evans as Millamant (1924). He produced Shakespeare's As You Like It for the opening night of the Shakespeare Festival at Stratford-upon-Avon in April 1919, and brought it back to the Lyric in April 1920. Critics derided an unconventional set and costumes by Claud Lovat Fraser, but in what Shakespearean scholar Sylvan Barnet calls the play's "first modern production", their spare design was later acknowledged as ground-breaking.
Playfair has been credited with a major influence on the BBC's 1923 wireless Shakespeares, the first produced by that organisation. He continued to work as a BBC producer for some years and is credited with having commissioned Richard Hughes to write the world's first radio play, Danger, broadcast on 15 January 1924. Playfair also appeared in a few motion picture films during the last years of his life.
Fortnum & Mason still markets Sir Nigel's Vintage Marmalade and there is a Nigel Playfair Avenue in Hammersmith, near Ravenscourt Park tube station. His house in Kensington, Thurloe Lodge, re-designed by him in the 1920s and referred to as "the most stylish house in London", was due for total demolition in 2013 following the death of the previous owner Mark Birley, to make way for a more modern 'villa'.
- Playfair wrote two volumes of memoirs about the Lyric:
- The Story of the Lyric Theatre, Hammersmith (London: Chatto & Windus 1925) with Arnold Bennett & A. A. Milne.
- Hammersmith Hoy. A Book of Minor Revelations (London: Faber & Faber 1930).
His play When Crummles Played, drawn from characters from Charles Dickens's Nicholas Nickleby and featuring those characters performing Lillo's George Barnwell, an 18th-century moral melodrama, opened at the Garrick Theatre on 1 October 1928.
- Sunken Rocks (1919)
- Perfect Understanding (1933)
- Crime on the Hill (1933)
- The Lady Is Willing (1934)
- Little Stranger (1934)
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