Albert Cardozo, Benjamin Cardozo's father, was a judge on the Supreme Court of New York (the state's general trial court) until 1868, when he was implicated in a judicial corruption scandal, sparked by the Erie Railway takeover wars. The scandal led to the creation of the Association of the Bar of the City of New York and his father's resignation from the bench. After leaving the court, he practiced law for nearly two decades more until his death in 1885. Rebecca Cardozo died in 1879 when Benjamin and Emily were young. The twins were raised during much of their childhood by their older sister Nell, who was 11 years older. One of Benjamin's tutors was Horatio Alger.

Benjamin Cardozo was a twin with his sister Emily. They had a total of four siblings, including an older sister and brother. One of many cousins was the poet Emma Lazarus; another was the preacher, Politician, and Teacher Francis Lewis Cardozo. Benjamin was named for his uncle, Benjamin Nathan, a vice President of the New York Stock Exchange and the victim of a noted famous unsolved murder case in 1870.

At age 15, Cardozo entered Columbia University where he was elected to Phi Beta Kappa, and then went on to Columbia Law School in 1889. Cardozo wanted to enter a profession that could materially aid himself and his siblings, but he also hoped to restore the family name, sullied by his father's actions as a judge. When Cardozo entered Columbia Law School, the program was only two years long; in the midst of his studies, however, the faculty voted to extend the program to three years. Cardozo declined to stay for an extra year, and thus left law school without a law degree.

Cardozo passed the bar in 1891 and began practicing appellate law alongside his older brother.

Benjamin Cardozo practiced law in New York City until year-end 1913 with Simpson, Warren and Cardozo.

In November 1913, Cardozo was narrowly elected to a 14-year term on the New York Supreme Court, taking office on January 1, 1914.

His tenure was marked by a number of original rulings, in tort and contract law in particular. This is partly due to timing; rapid industrialization was forcing courts to look anew at old Common law components to adapt to new settings. In 1921, Cardozo gave the Storrs Lectures at Yale University, which were later published as The Nature of the Judicial Process (On line version), a book that remains valuable to judges today. Shortly thereafter, Cardozo became a member of the group that founded the American Law Institute, which crafted a Restatement of the Law of Torts, Contracts, and a host of other private law subjects. He wrote three other books that also became standards in the legal world.

In February 1914, Cardozo was designated to the New York Court of Appeals under the Amendment of 1899, and was reportedly the first Jew to serve on the Court of Appeals. In January 1917, he was appointed to a regular seat on the Court of Appeals to fill the vacancy caused by the resignation of Samuel Seabury, and in November 1917, he was elected on the Democratic and Republican tickets to a 14-year term on the Court of Appeals. In 1926, he was elected, on both tickets again, to a 14-year term as Chief Judge. He took office on January 1, 1927, and resigned on March 7, 1932 to accept an appointment to the United States Supreme Court.

Cardozo was confirmed by a unanimous voice vote in the Senate on February 24. On a radio broadcast on March 1, 1932, the day of Cardozo's confirmation, Clarence C. Dill, Democratic Senator for Washington, called Hoover's appointment of Cardozo "the finest act of his career as President". The entire faculty of the University of Chicago Law School had urged Hoover to nominate him, as did the deans of the law schools at Harvard, Yale, and Columbia. Justice Harlan Fiske Stone strongly urged Hoover to name Cardozo, even offering to resign to make room for him if Hoover had his heart set on someone else (Stone had in fact suggested to Calvin Coolidge that he should nominate Cardozo rather than himself back in 1925). Hoover, however, originally demurred: there were already two justices from New York, and a Jew on the court; in addition, Justice James McReynolds was a notorious anti-Semite. When the chairman of the Senate Foreign Relations Committee, william E. Borah of Idaho, added his strong support for Cardozo, however, Hoover finally bowed to the pressure.

In response to this controversy, Cardozo biographer Kaufman questioned the usage of the term "Hispanic" in the justice's lifetime, stating: "Well, I think he regarded himself as a Sephardic Jew whose ancestors came from the Iberian Peninsula." It has also been asserted that Cardozo himself "confessed in 1937 that his family preserved neither the Spanish language nor Iberian cultural traditions". Ancestors had lived in English-speaking countries since the 17th century.

In late 1937, Cardozo had a heart attack, and in early 1938, he suffered a stroke. He died on July 9, 1938, at the age of 68 and was buried in Beth Olam Cemetery in Queens. His death came at a time of much transition for the court, as many of the other justices died or retired during the late 1930s and early 1940s.