Dunbar began playing at 15 in a band called The Yardbrooms. His first appearance on a recording was on the Dave and Ansell Collins album Double Barrel. Dunbar joined a band Ansell Collins called Skin, Flesh and Bones.

In 1972, Dunbar met and became friends with Robbie Shakespeare, who was then bass guitarist for the Hippy Boys. Shakespeare recommended Dunbar to Bunny Lee as a possible session drummer for the Aggrovators. Dunbar and Shakespeare decided to continue performing together. They worked with Peter Tosh and his band until 1981, recording five albums.

Dunbar and Shakespeare formed their Taxi Records label in 1980. It has seen releases from many international successful artists, including Black Uhuru, Chaka Demus and Pliers, Ini Kamoze, Beenie Man and Red Dragon.

Dunbar played for the Aggrovators for Bunny Lee, the Upsetters for Lee Perry, the Revolutionaries for Joseph Hoo Kim, and recorded for Barry O’Hare in the 1990s.

Sly also played on Bob Dylan’s albums Infidels and Empire Burlesque (using recordings from the Infidels sessions). Other sessions include their appearance on three Grace Jones albums, and work with Herbie Hancock, Joe Cocker, Serge Gainsbourg and the Rolling Stones.

In 2008, Sly Dunbar collaborated with the Jamaican percussionist Larry McDonald, on his debut album Drumquestra.