At the end of 1988, Dunham was told by James McCawley, a talent booker for "The Tonight Show with Johnny Carson", that Dunham would be given a spot on the program. Though the 26-year-old Dunham was elated that his 10-year goal was arriving two years early, McCawley later cancelled Dunham's appearance after attending, with Roseanne Barr, a public performance of Dunham's the day before Dunham's scheduled "Tonight Show" taping. McCawley informed Dunham on the day of the scheduled taping that he had been wrong in his initial assessment of Dunham, whom he now said was not ready for "The Tonight Show". His dreams dashed, the humiliated Dunham continued to tighten his act in Los Angeles clubs, performing same six minute segment with Peanut a total of nine times for McCawley over the next few months. Finally at the Ice-House in Pasadena in April 1990, after Dunham did the same segment, McCawley informed Dunham that he would finally get his "Tonight Show" appearance. Dunham and Peanut appeared on "The Tonight Show with Johnny Carson" on April 6, 1990, alongside guests Bob Hope and B.B. King. Following his bit, he was invited to sit on Johnny Carson’s couch, a mark of approval that only three comedians had ever garnered during their first Carson appearance. Upon sitting down next to Carson's desk, Dunham pulled out Walter, who told Carson sidekick Ed McMahon, "Stop sending me all your damn mail." At the time, Dunham saw his "Tonight Show" appearance as his big break, but was frustrated at his parents' initial disapproval over Walter's use of the words "hell" and "damn", and he would toil in obscurity for another twelve years, continuing his stand up at venues such as The Improv chain, and appearing in small roles on TV. One of these was such as a 1996 episode of "Ellen", in which he appeared with Walter. Dunham also appeared with Walter in a TV commercial for Hertz. Dunham would appear on "The Tonight Show" a total of four times, as well as similar TV venues such as "Hot Country Nights", appearing in one segment on that show with singer Reba McEntire. This exposure helped make Dunham a large theater headliner, a rare accomplishment for a ventriloquist, but by the mid 1990s, his television appearances had dwindled, and with them, so did his stage audiences.
Dunham moved back to clubs, more than 200 appearances a year. To maintain a connection with his fan base, he would use question cards that he had audiences fill out for his performances to build a database, which was tailor-made for the burgeoning World Wide Web. Though he was voted Funniest Male Standup at the American Comedy Awards in 1998, his club work kept him away from his wife and daughters between two and three weeks each month, which put a strain on his marriage, and made paying bills for his expanded family difficult. By 2002, Dunham was hoping to obtain more TV work to raise his profile and ease his standup schedule. Such exposure was elusive until a successful appearance on "The Best Damn Sports Show Period", where Dunham and Walter made jokes at the expense of co-hosts Tom Arnold, Michael Irvin, John Salley and John Kruk, generating laughter from them, and giving Dunham much-needed exposure. In 2003, Dunham was the frontrunner to replace Jimmy Kimmel on "Fox NFL Sunday", but hosts Howie Long and Terry Bradshaw were not amenable to the idea of being upstaged by a puppet, and, as Dunham tells it, did not provide a welcoming atmosphere to Dunham, nor allow him to get a word in edgewise during his appearance.
On July 18, 2003, Dunham appeared on "Comedy Central Presents", his first solo appearance on Comedy Central. During his half hour piece, he showcased José Jalapeño on a Stick, Walter, an early version of Melvin the Superhero Guy and Peanut, whom Dunham had begun to merchandise into a line of dolls. The appearance was successful, but Comedy Central resisted giving Dunham more airtime, feeling that he was not a good fit for them. By 2005 Dunham decided to gamble on financing his own comedy DVD, "", which was taped in Santa Ana, California. Dunham’s manager, Judi Brown-Marmel, lobbied the network to air it, pointing to Dunham's drawing power and merchandising profits, and arguing that the network needed more diverse content. Surprised by the high ratings of the first Blue Collar Comics concert movie that same year, the network began to reconsider its brand. In late 2006, Comedy Central aired "Arguing with Myself", drawing two million viewers when it aired, and selling two million DVDs.
In 2007, Dunham appeared as The Amazing Ken with José Jalapeño on a Stick in the Larry the Cable Guy feature film "Delta Farce".
His second special, "", was taped at the Warner Theater in Washington, D.C. that same year. It served not only to cement Dunham's stardom, but to introduce his most controversial character, Achmed the Dead Terrorist, which became a viral Internet sensation. A clip of Achmed from "Insanity" attracted over 140 million hits on YouTube, making it the ninth most watched clip on that website as of October 2009. By 2008, Dunham's characters had crossed language barriers, with his specials dubbed for audiences in various countries such as France, and Dunham attracting requests for performances in South Africa, Australia, Norway, Denmark, China and the Middle East. "Jeff Dunham's Very Special Christmas Special" was taped at the Pabst Theater in Milwaukee, Wisconsin that same year, and premiered on Comedy Central on November 16, 2008, watched by 6.6 million people. It became available on DVD and Blu-ray on November 18, 2008. The special's premiere was the highest rated telecast in Comedy Central's history.
In September 2008, Dunham's career reached new heights as he began performing in arenas filled with tens of thousands of people. Dunham was somewhat wary of such large venues, but adapted by adjusting the timing of his often rapid exchanges with the puppets so that audience members farthest from the stage could have time to react.
In addition to his comedy specials, Dunham also released his first music album, "Don't Come Home for Christmas", on November 4, 2008. It contains original Christmas songs as well as a parody of "Jingle Bells" by Achmed entitled "Jingle Bombs". All the songs, with the exception of "Jingle Bombs", were written and accompanied by Brian Haner, who joined Dunham's act as "Guitar Guy". His first onscreen appearance was in "Jeff Dunham's Very Special Christmas Special".
In March 2009, Dunham signed a multi-platform deal with Comedy Central. It included a fourth stand-up special to air in 2010, DVDs, a consumer products partnership, a 60-city tour beginning in September 2010, and an order for a television series called "The Jeff Dunham Show" that premiered on October 22, 2009. Despite having the most-watched premiere in Comedy Central history, and higher average ratings than other shows on that network, the show was canceled after only one season, amid poor reviews and higher production costs than other Comedy Central shows.
Dunham appeared in a guest role with Bubba J on NBC's sictom "30 Rock", playing a ventriloquist named Rick Wayne and his dummy Pumpkin from Stone Mountain, Georgia. In November 2009 Dunham also appeared with Walter in "Hart to Hart", an episode of the Disney Channel series "Sonny With a Chance", as two security guards.
Dunham appeared in the 2010 Steve Carell/Paul Rudd comedy, "Dinner for Schmucks", as Lewis, with a new puppet named Diane.
His fourth special, "Jeff Dunham: Controlled Chaos", premiered on September 25, 2011 on Comedy Central.
In January 2008, Dunham was voted by fans the Top Comic in Comedy Central's “Stand-Up Showdown.” He is the only person ever to win the "Ventriloquist of the Year" Award twice, was nominated "Comedian of the Year" by the TNN Music City News Country Awards, and has drawn praise from the "Dallas Morning News" for his technique and timing.