Born in Reykjavik, Iceland, Hansen came to the United States and majored in English and Scandinavian Studies at the University of Texas before beginning his acting career.
His breakout role was in 1974's The Texas Chainsaw Massacre, in which he played a psychopath who terrorizes a group of friends.
In 2013, Hansen offered an insider's look at the making of the film in his book Chain Saw Confidential.
At the time of his death, he was working as a writer and producer on the film Death House, which is about a prison break and is scheduled to be released in 2016.
Hansen is survived by his partner, Betty Tower.