A native of Athens, Papaloukas began his career at the small local Athens team Ethnikos Ellinoroson. His distinctive style (a 2-meters- [nearly 6 feet 7 inches] tall point guard) led him to move to rising team of Ampelokipoi, then Dafni and eventually to Panionios, a mid-level classic team for first league Greek basketball. His impressive performances garnered him his first move to a major Greek team, Olympiakos, and to the Greek national team, of which he is still a core element. He has played at the European Championships of 2001 in Turkey, 2003 in Sweden, and 2005 in Serbia and Montenegro. After an embarrassing year both for him and for Olympiakos, he moved to another European powerhouse, CSKA Moscow in 2002, where, in June 2006, he re-signed a three-year contract which will keep him playing for the team until the summer of 2009.
Papaloukas, who was already well-established in European basketball as a result of appearances in three consecutive Euroleague Final Fours with CSKA, achieved an acclaimed position among the elite of European basketball at the Eurobasket 2005 in Serbia and Montenegro. After a series of mediocre performances in the first round, he led Greece to defeat Russia in the quarterfinals and orchestrated a major comeback against France in the semifinal, when Greece was down 7 points with 47 seconds on the clock. In the final against Germany, led by the prodigious NBA All-Star Dirk Nowitzki, he scored 22 points, leading Greece comfortably to its second European title, eighteen years after its first win in 1987. As such, he was selected in the top-5 team of the Championship, along with fellow Greek Dimitris Diamantidis.
Papaloukas also joined the elite club of players who achieved the European title at the national and club level at the same year, as he won the Euroleague title with CSKA at the Final Four in Prague, April 28-April 30, 2006. With 19 points in the semifinal against FC Barcelona, and another 18 at the final against back-to-back European champion Maccabi Tel Aviv, he was awarded the Final Four MVP award, having also been named the best point guard of the Euroleague for 2005-2006.
Papaloukas climbed to the second position of global basketball as he, along with his fellow players, drove Greece to the final of the 2006 World Championship in Japan, losing there to Spain. In the historic victory of Greece over Team USA in the semifinal by 101-95, he gave a dominant performance, with a whopping 12 assists, 8 points and 5 rebounds. He also earned a place in the all-tournament team.
His most formidable personal recognition came on January 26, 2007, when it was announced by FIBA Europe that he was voted by fans and journalists as best european player for 2006, topping the likes of Dirk Nowitzki, Pau Gasol and Tony Parker.
In 2007, Papaloukas was voted as the MVP of the Euroleague 2006/07 in regular season. In the final he played against Panathinaikos. Panathinaikos won with 93-91 in a very exciting game. Papaloukas tried very hard to beat Panathinaikos, scoring 23 points and dishing 8 assists, but a number of sportswriters intimated that he did not receive adequate support from his CSKA teammates.
Despite the interest of Miami Heat and the Los Angeles Lakers, Papaloukas signed a 3-year contract with CSKA in July 2007, making him the best-paid basketball player in Europe.
Papaloukas was capped 131 times for the Greek national team, scoring 958 points.