As an actor, Kelly became the first Black martial arts film star. He co-starred alongside Bruce Lee in the blockbuster, Enter the Dragon (1973) in a role originally intended for actor Rockne Tarkington, who unexpectedly dropped out days before shooting in Hong Kong. Producer Fred Weintraub had heard about Kelly's karate studio in the Crenshaw district of Los Angeles, went there to see him, and was immediately impressed.

This appearance led to starring roles in a string of martial arts-themed blaxploitation films, among them Melinda (1972), and Black Belt Jones (1974). This was the only role in which he was the primary star; most of Kelly's film roles played up the novelty of an African-American martial arts master. He earned a three-film contract with Warner Brothers and made Three the Hard Way (1974) with Jim Brown and Fred Williamson, and Hot Potato (1976), in which he rescues a diplomat's daughter from the jungles of Thailand.

After his contract ended with Warner Brothers, he starred in low-budget films Black Samurai (1977), Death Dimension (1978), and Tattoo Connection (1978). After his appearance in One Down, Two to Go (1982), Kelly rarely appeared in movies. A deleted scene from the film Undercover Brother (2002), included on the DVD extra features, shows him in a cameo appearance with Eddie Griffin.

In his last film, Kelly made a cameo appearance as Cleavon Washington in Afro Ninja (2009), produced, directed by, and starring veteran stuntman Mark Hicks