As a teenager Rey played in punk band Shrapnel, which also featured Dave Wyndorf, later of Monster Magnet. Shrapnel put out two 45 singles (Combat Love and Go Cruisin') and a five-song self-titled e.p., and played CBGB regularly in their brief career. He first collaborated with the Ramones on their 1984 album Too Tough to Die, where he co-wrote the song "Daytime Dilemma (Dangers of Love)" with Joey Ramone, and from there produced three of the band's albums, Halfway to Sanity, Brain Drain and ¡Adios Amigos!. He co-wrote the popular Ramones single Pet Sematary with Dee Dee Ramone. Rey did all of the guitar work for 9 of the 11 songs on Joey Ramone's 2002 solo album Don't Worry About Me.
Rey was also the guitarist for the band Manitoba's Wild Kingdom, which he formed in 1986 with Handsome Dick Manitoba and Andy Shernoff of The Dictators. Wild Kingdom released a version of "New York New York" on the 1988 soundtrack to Mondo New York, before Rey left the band and was replaced by Ross "The Boss" Friedman.
Rey has also been the guitarist/producer for Ronnie Spector since the mid 1990s.
Daniel recorded the theme song to Todd Solondz's cult comedy Welcome to the Dollhouse (1995), as well as a number of other tracks on the soundtrack. In the movie Daniel's recording of the theme song is the one that is heard while a young actor's character plays the song with his garage band.
He currently plays with The Martinets.