Born in Athens, Papaioannou showed a flair for fine art from an early age, and studied under the renowned Greek painter Yannis Tsarouchis for three years in his mid-teens. At 19, he earned himself a place at the Athens School of Fine Arts, entering the institution with the highest marks attained by any student, and there studying under Dimitris Mytaras and Rena Papaspyrou.
Papaioannou contributed to the Greek gay activist magazine To Kraximo (1981-1994) in the early 1980s, and gave an interview to the publication in 1993. Moreover, he published over 40 comics in Greek alternative comics magazines such as Babel and Para Pende, many of which incorporated gay themes and explicit images. He was awarded first prize in a competition organised by Marseille Public Transport Authority at the 5th Biennial of Young Artists from Europe and the Mediterranean, held in Marseille in 1990, for his comic Un Bon Plan.
Papaioannou began to take an interest in dance and the performing arts while still at the Athens School of Fine Arts, training and experimenting as a performer and choreographer, as well as a costume, set and make-up designer with dance companies in Greece. In 1986, Papaioannou took a trip to New York where he was introduced to the Erick Hawkins Technique at the dancer and choreographer's studio, and where he attended seminars on Butoh given by Maureen Fleming at La MaMa E.T.C. While in U.S.A., he choreographed and performed in the 1986 opera The Monk and the Hangman's Daughter, directed by Ellen Stewart and presented in Baltimore.
Upon his return to Athens in 1986, he founded Edafos Dance Theatre ("ground" in Greek) with Angeliki Stellatou, and went on to conceive, direct, choreograph and produce all 17 of the company's productions over its 16 years of life (the company disbanded in 2002). The group's four early works - The Mountain-The Raincoat in 1987, and Room I-Room II in 1988 - represented Greece at the 3rd and 4th Biennials of Young Artists from Europe and the Mediterranean, held in Barcelona and Bologna respectively, and were warmly received by the press.
In 1989, Papaioannou left Greece for Germany to work as an unpaid trainee assistant to Robert Wilson in Hamburg. He then accompanied Wilson to Berlin to act as a stand-in for the lights for his production of Orlando.
Papaioannou, once back in Athens, created The Last Song of Richard Strauss in collaboration with the visual artist Nikos Alexiou in 1990, the first in a series of critical successes for the Edafos Dance Theatre company. Moons followed in 1992, a two-part work that drew upon the poetry of Sappho and the ballet Le Spectre de la Rose, but it was 1993's Medea that was to prove the company's greatest success.
Beyond his work with Edafos Dance Theatre, Papaioannou undertook a number of other projects between 1986 and 2001. He directed two operas for the Athens Megaron Concert Hall. He also directed two stage shows for the Greek singer Haris Alexiou, and two for Alkistis Protopsalti.
As a choreographer, Papaioannou worked with the Greek National Theatre, the National Theatre of Northern Greece, Lefteris Vogiatzis' nea SKINI theatre company, and the Athens Festival, and created choreographies for two works directed by the Oscar-nominated director Michael Cacoyannis. He also designed sets and costumes for the Greek National Opera, and a number of Greek theatre and dance companies. As a performer, he worked with numerous Greek dance companies, including OKTANA Dance Theatre.
His film work included performances in Menelaos Karamagiolis' 1998 feature film Black Out p.s. Red Out and the 1990 film short The Kiss by Alexis Bistikas (which saw him engage in an on-screen kiss with the actor Stavros Zalmas), and sets for Bistikas' 1989 film short The Marbles.
In 2001, Papaioannou was appointed Artistic Director of the Opening and Closing Ceremonies of the Athens 2004 Olympic Games by Gianna Angelopoulos-Daskalaki, President of the Athens 2004 Organising Committee for the Olympic Games. Three years in the making, the Opening Ceremony was hailed a "triumph" by Time magazine and The Times of London. In 2005, following the success of the Athens 2004 Olympic Ceremonies, Papaioannou received the Golden Cross of the Order of Honour, awarded by the President of the Hellenic Republic for outstanding artistic achievement.
On 24 November 2006, Papaioannou premièred "2" in Athens, his first work following his creative direction of the Opening and Closing Ceremonies of the Athens 2004 Olympic Games. "2" was produced in collaboration with the electronic music composer K.BHTA for the production company Elliniki Theamaton. A "dissection of the male psyche", the production commanded a large of amount of Greek press attention, not least for its open references to homosexuality. "2" proved a commercial success; its run was extended twice and over 100,000 tickets were sold in total.