Tim made his professional debut for Watford in 1987 playing in Division Two. After 32 games he moved to Norwich in 1989. After 88 games and 13 goals for the Canaries Sherwood was bought by Kenny Dalglish of Blackburn in 1992. During his time at Blackburn Tim achieved a 2nd place finish in the 93-94 Premiership season and then went on to win the league the following season. Tim made nearly 250 appearances for Blackburn and was then sold to Tottenham for £3 million where he was cup tied for the teams 1999 Football League Cup Final win. He made his way back to the final in 2002 where Spurs were beaten by his former club Blackburn.

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After retiring Tim has spent time as the manager of Tottenham and Aston VIlla.