The son of former Celtic,Liverpool and Scotland international striker and later Liverpool, Blackburn and Newcastle manager Kenny Dalglish, Paul joined Norwich on loan from Newcastle on 25th March 1999 (transfer deadline day). Paul followed his father's footsteps and began his career at Celtic before joining Liverpool. He made no league appearances for either side before moving to join his father at Newcastle. He made his league debut whilst on loan to Bury but did not fit into Ruud Gullit's plans for Newcastle, once he had replaced Kenny Dalglish as manager. Although injuries curtailed his appearances at Carrow Road whilst on loan, he was positive about the prospects of joining the club.

Paul eventually signed for the Canaries on Friday 21st May for a fee of £300,000, rising to £500,000 on appearances. Paul scored Norwich's first goal of the 1999/2000 season on the opening day of the season at West Bromwich Albion and his initial form earned him a regular spot in the Scotland Under 21 side.

The good form was not to last and his inability to impress when chosen for the first team led to speculation that Paul will be heading out of Carrow Road. If he was to make further appearances taking his total to 50, Norwich would owe Newcastle further money as part of the original transfer agreement. Second Division Bury were linked with a move for Dalglish whilst Luton entered the frame in January 2001 with suggestions of a loan move to Kenilworth Road.

Paul eventually joined Wigan on loan on 22nd March 2001 with an understanding that Norwich would not obstruct a permanent move if Wigan and Dalglish agreed with one another. Two sendings-off in consecutive matches over the Easter period blotted Paul's copybook with Wigan but manager Steve Bruce suggested that he would be keen to sign Paul permanently. Paul returned to Wigan in August 2001 initially training with them before signing for them on a free transfer on 24th August 2001.

At the end of March 2002, Wigan released him. April 2002 saw him called up into Berti Vogt's Scottish practice squad for uncapped players. He then headed for the USA for a trial with Washington's DC United, managed by Brit Ray Hudson. Paul then resurfaced back in Lancashire in mid-July 2002 having unsucessful trials with both Preston and Burnley. After a trial with Peterborough, Dalglish returned to Lancashire to trial with his father's old teammate Steve McMahon's Blackpool and he played in two pre-season friendlies against Athletico Madrid and Morecambe. McMahon appeared impressed with Dalglish's versatility in that he could play up front or out wide. Paul signed a one year contract with Blackpool on 9th August 2002 and scored his first goal for his new club in their second match of the season which finished a 5-2 win against Luton.

The Sun reported on 19th November 2002 that Dalglish had been spotted in a passionate embrace with model Katie Price, better known as Jordan. Jordan has had flings with other footballers, including Dwight Yorke who is allegedly the father of her baby Harvey.

In March 2003, the Sun reported that Paul had quit Blackpool for a contract with American side Dallas Burn of the MLS (Major League Soocer). In reality, he played a trial game for the Burn against the New York Metrostars in which he scored twice in a 3-0 win. However they opted instead to pursue their interest in other strikers including Hungarian international Gabor Torma, Honduran Milton Nunez, Barbadian Gregory Goodridge - once of Bristol City, and Middlesborough's Brazilian Arturo Bernhardlt.

On returning to England, Paul was loaned out to Scunthorpe on March 20th 2003 where he competed with Robert Taylor and Paul Hayes for a position up front. He stayed with the Iron until they were knocked out of the Third Division play-offs at the semi-final stage against Lincoln. On returning to Bloomfield Road, he discovered that he had been released by Blackpool and is seeking a new club again. Paul's search took him to Northern Ireland in July 2003 where he trained with Linfield. This materialised into a contract with the Irish side a few days later. Paul's Irish adventure lasted until mid-October 2003 when the two parties agreed to a parting of the ways. Due to business commitments, Dalglish was unable to make the regular journeys across the Irish Sea to attend training. Linfield opted to replace him with more dependable players.

On 21st January 2004, it was reported that Paul had signed for Italian side Modena. On 29th April 2004, it was reported that Paul was training with Tranmere but that there were no plans for them to sign him. Paul then had a regular spot on Sky Sports' Soccer AM show - his sister also works for Sky.

Paul joined Luton Town on trial in July 2005 but joined Scottish side Livingston the following month. Paul transferred to Hibs on 31st January 2006.

In August 2006, Paul quit Hibs to sign for American side Houston Dynamo of the MLS. Paul had found first-team opportunities limited after injury hampered his progress. Hibs boss Tony Mowbray said: "It is not as if Paul was unhappy at our club. He simply wanted to go and play, so we were not going to stand in his way. He had become frustrated sitting on the bench so we allowed him to go." Dalglish made five starts, plus 11 appearances as a substitute, scoring one goal for the Edinburgh club

On November 5, 2006, the Dynamo defeated the Colorado Rapids 3-1 in the Western Conference final to earn a spot in its first MLS Cup as the Houston Dynamo. Dalglish scored twice and was named Man of the Match. Dalglish then spent a frustrating season curtailed by injury and needed an ankle operation last August.

In January 008, Paul was released by the Dynamo and embarkedon a three day trial with Ipswich Town. After trialling with League One side Leeds United and playing in a reserve game for them on 13th February 2008, he had talks with a few clubs in February 2008 including Scottish club Kilmarnock, with whom he signed a contract till the end of the season.