Tallmadge was born February 25, 1754, the son of Susannah Smith (1729–1768) and Rev. Benjamin Tallmadge Sr. (1725–1786), a clergyman in Setauket, New York, a hamlet in the Town of Brookhaven on Long Island. He graduated from Yale in 1773 and was a classmate of American Revolutionary War spy Nathan Hale. He was the father of New York City Police Commissioner Frederick A. Tallmadge. He remained in Connecticut and served as the superintendent of Wethersfield High School from 1773 to 1776.

Tallmadge was a major in the 2nd Continental Light Dragoons. He was initially commissioned on June 20, 1776. Major Benjamin Tallmadge was given the position of Director of military intelligence by George Washington after Nathaniel Sackett was relieved of his duties because he did not gain any ground from the enemy. Tallmadge was in charge of bringing intelligence from British controlled New York to the Continental army. He did so by providing one of the most successful and famous network of spies to ever be assembled, The Culper Spy Ring. With the help of Abraham Woodhull (Culper Sr.) and Robert Townsend (Culper Jr.), they were able to supply the Rebels with information right from under the enemies' noses. Tallmadge put into effect a system that would be able to relay the information with as little suspicion as possible. First a messenger named Austin Roe would ride fifty-five miles from Setauket to New York. Next, Robert Townsend would then proceed to give Roe the information along with other articles and papers to disguise the real message. Austin Roe would then ride all the way back to Setaucket and place the valuable information in a box buried in the ground that belonged to Abraham Woodhull. Woodhull would then transfer the letter to an inconspicuous bag and wait for a signal from Mrs. Anna Strong. Mrs. Strong would hang a black petticoat and several handkerchiefs, which would convey the proper meeting place for Woodhull to meet up with Caleb Brewster. From there Brewster would take the message to Major Tallmadge or John Bolton as he is known in the Culper Code Book. Tallmadge, in the end, would give the information to Washington where it would then be used against the British forces. This system worked flawlessly for Tallmadge's crew and helped bring the war to an end with their valuable information. The Culper Ring is thought by some to have revealed the betrayal of Benedict Arnold, though this is disputed.

On November 21, 1780, Tallmadge and his dragoons rowed across the Long Island Sound from Fairfield, Connecticut to Cedar Beach in present-day Mount Sinai, New York. The next day, they proceeded to the south shore where they captured and burned down Manor St. George. On their march back to Mt. Sinai, Tallmadge stopped in Coram and ordered the burning of 300 tons of hay which the British had been stockpiling for the winter. George Washington, on hearing the news, sent the following letter to Tallmadge:

Tallmadge served at Washington's headquarters from March 1781 until the Continental Army was disbanded in November 1783. He was breveted to the rank of lieutenant colonel on September 30, 1783.

On March 18, 1784, Tallmadge married Mary Floyd (1764–1805), daughter of Maj. Gen. william Floyd, signer of the Declaration of Independence and Governor of New York. His children included:

On March 4, 1801, Tallmadge succeeded william Edmond as a Federalist Party member of the United States House of Representatives representing Connecticut's at-large congressional district. He served until March 3, 1817 when he was succeeded by Thomas Scott Williams.

In 1808, after his first wife's death in 1805, Tallmadge married Maria Hallett (d. 1838), daughter of his friend, Joseph Hallett.

In 1829, Tallmadge was among a group of Federalists who defended the honor of the late Connecticut Senator Uriah Tracy against accusations by John Quincy Adams and william Plumer that Tracy, beginning in early 1804, was a leader of a conspiracy to separate the New England states into a distinct confederacy. Said Tallmadge to his neighbor and Tracy's son-in-law James Gould: "General Tracy never conferred with me on the subject of forming a separate government in New England; nor have I any reason to believe that such a project ever seriously entered into his mind. Although Messrs. Adams and Plumer assert their belief that certain Leaders of the Federal party from New England actually entertained the idea of forming a separate New England government, and that a combination was actually formed for that purpose, I have no belief that such combination or project was formed (unless the aforesaid Adams and Plumer, then passing for Federalists, will allow that they entertained the idea); nor can I suppose that General Tracy would have countenanced such a nefarious conspiracy for one moment."