Born in Tunapuna, Trinidad, then a British Crown colony, James was the first child of Elizabeth James and Robert Alexander James, a schoolteacher. In 1910 he won a scholarship to Queen's Royal College (QRC), the island's oldest non-Catholic secondary school, in Port of Spain, where he became a club cricketer and distinguished himself as an athlete (he would hold the Trinidad high-jump record at 5 feet 9 inches from 1918 to 1922), as well as beginning to write fiction. After graduating in 1918 from QRC, he worked there as a Teacher of English and History in the 1920s; among those he taught was the young Eric Williams, who would become the first Prime Minister of Trinidad and Tobago. Together with Ralph de Boissière, Albert Gomes and Alfred Mendes, James was a member of the anticolonialist "Beacon Group", a circle of Writers associated with The Beacon magazine, in which he published a series of short stories.

James married his first wife, Juanita Young, in Trinidad in 1929, but his move three years later to Britain led to their estrangement. He met his second wife, Constance Webb (1918–2005), an American model, Actress and author, after he moved to the US in 1938; she wrote of having first heard him speak in the spring of 1939 at a meeting in California. They married in 1946 and were divorced in 1953, when James was deported to Britain. He and Webb had a son, C. L. R. James, Jr, familiarly known as Nobbie. In 1956 James married Selma Weinstein (née Deitch), who had been a young member of the Johnson-Forest Tendency; they remained close political colleagues for more than 25 years. She is best known as the founder of the International Wages for Housework Campaign.

In 1932, James left Trinidad for the small town of Nelson in Lancashire, England, at the invitation of his friend, West Indian cricketer Learie Constantine, who needed his help writing his autobiography Cricket and I (published in 1933). James had brought with him to England the manuscript of his first full-length non-fiction work, partly based on his interviews with the Trinidad labour leader Arthur Andrew Cipriani, which was published with financial assistance from Constantine in 1932.

James had begun to campaign for the independence of the West Indies while in Trinidad. An abridged version of his Life of Captain Cipriani was issued by Leonard and Virginia Woolf's Hogarth Press in 1933 as the pamphlet The Case for West-Indian Self Government. He became a champion of Pan-Africanism, and was named Chair of the International African Friends of Abyssinia, later renamed the International African Friends of Ethiopia (IAFE) – a group formed in 1935 in response to the Italian fascist invasion of Ethiopia (the Second Italo-Abyssinian War). Leading members included Amy Ashwood Garvey, Jomo Kenyatta and Chris Braithwaite.

In 1934, James wrote a three-act play about the Haitian revolutionary Toussaint L'Ouverture, which was staged in London's West End in 1936 and starred Paul Robeson, Orlando Martins, Robert Adams and Harry Andrews. That same year saw the publication in London by Secker & Warburg of James's novel, Minty Alley, which he had brought with him in manuscript from Trinidad. (Fenner Brockway had introduced him to Fredric Warburg, co-owner of the press.) It was the first novel to be published by a black Caribbean author in the UK.

In 1936, James and his Trotskyist Marxist Group left the ILP to form an open party. In 1938, this new group took part in several mergers to form the Revolutionary Socialist League (RSL). The RSL was a highly factionalised organisation. When James was invited to tour the United States by the leadership of the Socialist Workers' Party (SWP), then the US section of the Fourth International, to facilitate its work among black workers, one Trotskyist, John Archer, encouraged him to leave in the hope of removing a rival. James's relationship with Louise Cripps had broken up after her second abortion so that intimate tie no longer bound him to England.

Amid his frenetic political activity, James wrote what are perhaps his best known works of non-fiction: World Revolution (1937), a history of the rise and fall of the Communist International, which was critically praised by Leon Trotsky, George Orwell, E. H. Carr and Fenner Brockway; and The Black Jacobins: Toussaint L'Ouverture and the San Domingo Revolution (1938), a widely acclaimed history of the Haitian Revolution, which would later be seen as a seminal text in the study of the African diaspora. James went to Paris to research this work, where he met Haitian military Historian Alfred Auguste Nemours.

James travelled to the United States in late 1938. After a tour sponsored by the SWP, he visited Trotsky in Coyoacán, México in April 1939. He stayed about a month and also met Diego Rivera and Frida Kahlo, before returning to the United States in May 1939. A key topic that James and Trotsky discussed was the "Negro Question". Whereas Trotsky saw the Trotskyist Party as providing leadership to the Black community, in the general manner that the Bolsheviks provided guidance to ethnic minorities in Russia, James suggested that the self-organised struggle of African Americans would precipitate a much broader radical social movement.

While within the WP, the views of the Johnson-Forest Tendency underwent considerable development. By the end of the Second World War, they had definitively rejected Trotsky's theory of Russia as a degenerated workers' state. Instead, they Classified it as state capitalist, a political evolution shared by other Trotskyists of their generation, most notably Tony Cliff. Unlike Cliff, the Johnson-Forest Tendency was focusing increasingly on the liberation movements of oppressed minorities, a theoretical development already visible in James's thought in his 1939 discussions with Trotsky. Such liberation struggles came to take centre stage for the Johnson-Forest Tendency.

After the Second World War, the WP witnessed a downturn in revolutionary sentiment. The Tendency, on the other hand, was encouraged by the prospects for revolutionary change for oppressed peoples. After a few short months as an independent group, during which they published a great deal of material, in 1947, the Johnson-Forest Tendency joined the SWP, which it regarded as more proletarian than the WP.

James would still describe himself as a Leninist despite his rejection of Vladimir Lenin's conception of the vanguard role of the revolutionary party. He argued for socialists to support the emerging black nationalist movements. By 1949, James rejected the idea of a vanguard party. This led the Johnson-Forest Tendency to leave the Trotskyist movement and rename itself the Correspondence Publishing Committee.

In 1953, James was forced to leave the US under threat of deportation for having overstayed his visa. In his attempt to remain in America, he wrote a study of Herman Melville, Mariners, Renegades and Castaways: The Story of Herman Melville and the World We Live In, and had copies of the privately published work sent to every member of the Senate. He wrote the book while being detained on Ellis Island. In an impassioned letter to his old friend George Padmore, James said that in Mariners that he was using Moby Dick as a parable for the anticommunism sweeping the United State, a consequence, he thought, of Americans' uncritical faith in capitalism.

Returning to Britain, James appeared to Padmore and his partner Dorothy Pizer to be a man adrift. After James started reporting on cricket for the Manchester Guardian, Padmore wrote to American Novelist Richard Wright: "That will take him out of his ivory tower and making his paper revolution...."' Grace Lee Boggs, a colleague from the Detroit group, came to London in 1954 to work with James, but she, too, saw him "at loose ends, trying to find his way after fifteen years out of the country."

In 1955 after James had left for Britain, about half the membership of the Committee withdrew, under the leadership of Raya Dunayevskaya, to form a separate tendency of Marxist-humanism and found the organisation News and Letters Committees. Whether Dunayevskaya's faction had constituted a majority or a minority in the Correspondence Publishing Committee remains a matter of dispute. Historian Kent Worcester claims that Dunayevskaya's supporters formed a majority, but Martin Glaberman claims in New Politics that the faction loyal to James had a majority.

In 1957, James travelled to Ghana for the celebration of its independence from British rule. He had met Ghana's new head of state, Kwame Nkrumah, in the United States when Nkrumah was studying there and sent him on to work with George Padmore in London after the Second World War; Padmore was by this point a close Nkrumah advisor and had written The Gold Coast Revolution (1953). In correspondence sent from Ghana in 1957, James told American friends that Nkrumah thought he, too, ought to write a book on the Convention People's Party, which under Nkrumah's leadership had brought the country to independence. The book would show how the party's strategies could be used to build a new African Future. James invited Grace Lee Boggs, his colleague from Detroit, to join in the work, though in the end, James wrote Nkrumah and the Ghana Revolution on his own. The book was not published until 1977 (by Allison & Busby), years after Nkrumah's overthrow, exile and subsequent death.

In 1958 James went back to Trinidad, where he edited The Nation newspaper for the pro-independence People's National Movement (PNM) party. He also became active again in the Pan-African movement. He believed that the Ghana revolution greatly encouraged the anticolonialist revolutionary struggle.

While Editor of The Nation, he led the successful campaign in 1960 to have Frank Worrell appointed the first black captain of the West Indies cricket team. James believed that the relationship between players and the public was a prominent reason behind the West Indies' achieving so much with so little.

The Committee split again in 1962, as Grace Lee Boggs and James Boggs, two key Activists, left to pursue a more Third Worldist approach. The remaining Johnsonites, including leading member Martin Glaberman, reconstituted themselves as Facing Reality. James advised the group from Great Britain until it dissolved in 1970, against his urging.

James also advocated the West Indies Federation. It was over this issue that he fell out with the PNM leadership. He returned to Great Britain, where he joined Calvin Hernton, Obi Egbuna and others on the faculty of the Antiuniversity of London, which had been set up by a group of left-wing thinkers led by American academic Joseph Berke. In 1968 James was invited to the USA, where he taught at the University of the District of Columbia.

Ultimately returning to Britain, he spent his last years in Brixton, London. In the 1980s, he was awarded an Honorary Doctorate from South Bank Polytechnic (later to become University of the South Bank, in London) for his body of socio-political work, including that relating to race and sport.

His funeral took place on 12 June in Trinidad, where he was buried at Tunapuna. A state memorial Service was held for him at the National Stadium, Port of Spain, on 28 June 1989.

The book's key question, frequently quoted by modern journalists and essayists, is inspired by a line in Rudyard Kipling's poem "English Flag" – "What do they know of England who only England know?". James asks in the Preface: "What do they know of cricket who only cricket know?" Acknowledging that "To answer involves ideas as well as facts", James uses this challenge as the basis for describing cricket in an historical and social context, the strong influence cricket had on his life, and how it meshed with his role in politics and his understanding of issues of class and race. The literary quality of the writing attracts cricketers of all political views.

Characterised by one literary critic as an "anti-Stalinist dialectician", James was known for his autodidactism, for his occasional playwriting and fiction — his 1936 book Minty Alley was the first novel by a black West Indian to be published in Britain — and as an avid sportsman. He is also famed as a Writer on cricket, and his 1963 book, Beyond a Boundary, which he himself described as "neither cricket reminiscences nor autobiography", is often named as the best single book on any sport, ever written.