In 1709, Defoe authored a rather lengthy book entitled The History of the Union of Great Britain, an Edinburgh publication printed by the Heirs of Anderson. The book was not published anonymously and cites Defoe twice as being its author. The book attempts to explain the facts leading up to the Act of Union 1707, dating all the way back to 6 December 1604 when King James I was presented with a proposal for unification. This so-called "first draft" for unification took place 100 years before the signing of the 1707 accord, which respectively preceded the commencement of Robinson Crusoe by another ten years.

Daniel Foe (his original name) was born on 13 September, 1660, likely in Fore Street in the parish of St. Giles Cripplegate, London. Defoe later added the aristocratic-sounding "De" to his name, and on occasion claimed descent from the family of De Beau Faux. His birthdate and birthplace are uncertain, and sources offer dates from 1659 to 1662, with the summer or early autumn of 1660 considered the most likely. His father James Foe was a prosperous tallow chandler and a member of the Worshipful Company of Butchers. In Defoe's early life, he experienced some of the most unusual occurrences in English history: in 1665, 70,000 were killed by the Great Plague of London, and next year, the Great Fire of London left standing only Defoe's and two other houses in his neighbourhood. In 1667, when he was probably about seven, a Dutch fleet sailed up the Medway via the River Thames and attacked the town of Chatham in the raid on the Medway. His mother Annie had died by the time he was about ten.

A novel often read as non-fiction, this is an account of the Great Plague of London in 1665. It is undersigned by the initials "H. F.", suggesting the author's uncle Henry Foe as a primary source. It is an historical account of the events based on extensive research, published in 1722.

Defoe entered the world of Business as a general merchant, dealing at different times in hosiery, general woollen goods, and wine. His ambitions were great and he was able to buy a country estate and a ship (as well as civets to make perfume), though he was rarely out of debt. He was forced to declare bankruptcy in 1692. On 1 January 1684, Defoe married Mary Tuffley at St Botolph's Aldgate. She was the daughter of a London merchant, receiving a dowry of £3,700—a huge amount by the standards of the day. With his debts and political difficulties, the marriage may have been troubled, but it lasted 50 years and produced eight children.

In 1685, Defoe joined the ill-fated Monmouth Rebellion but gained a pardon, by which he escaped the Bloody Assizes of Judge George Jeffreys. Queen Mary and her husband william III were jointly crowned in 1688, and Defoe became one of William's close allies and a secret agent. Some of the new policies led to conflict with France, thus damaging prosperous trade relationships for Defoe, who had established himself as a merchant. In 1692, Defoe was arrested for debts of £700, though his total debts may have amounted to £17,000. His laments were loud and he always defended unfortunate debtors, but there is evidence that his financial dealings were not always honest. He died with little wealth and evidence of lawsuits with the royal treasury.

Following his release, he probably traveled in Europe and Scotland, and it may have been at this time that he traded wine to Cadiz, Porto and Lisbon. By 1695, he was back in England, now formally using the name "Defoe" and serving as a "commissioner of the glass duty", responsible for collecting taxes on bottles. In 1696, he ran a tile and brick factory in what is now Tilbury in Essex and lived in the parish of Chadwell St Mary.

Defoe's first notable publication was An essay upon projects, a series of proposals for social and economic improvement, published in 1697. From 1697 to 1698, he defended the right of King william III to a standing army during disarmament, after the Treaty of Ryswick (1697) had ended the Nine Years' War (1688–97). His most successful poem, The True-Born Englishman (1701), defended the king against the perceived xenophobia of his enemies, satirising the English claim to racial purity. In 1701, Defoe presented the Legion's Memorial to the Speaker of the House of Commons, later his employer Robert Harley, flanked by a guard of sixteen gentlemen of quality. It demanded the release of the Kentish petitioners, who had asked Parliament to support the king in an imminent war against France.

Defoe made no attempt to explain why the same Parliament of Scotland which was so vehement for its independence from 1703 to 1705 became so supine in 1706. He received very little reward from his paymasters and of course no recognition for his services by the government. He made use of his Scottish experience to write his Tour thro' the whole Island of Great Britain, published in 1726, where he admitted that the increase of trade and population in Scotland which he had predicted as a consequence of the Union was "not the case, but rather the contrary".

Not all of Defoe's pamphlet writing was political. One pamphlet was originally published anonymously, entitled "A True Relation of the Apparition of One Mrs. Veal the Next Day after her Death to One Mrs. Bargrave at Canterbury the 8th of September, 1705." It deals with interaction between the spiritual realm and the physical realm and was most likely written in support of Charles Drelincourt's The Christian Defense against the Fears of Death (1651). It describes Mrs. Bargrave's encounter with her old friend Mrs. Veal after she had died. It is clear from this piece and other writings that the political portion of Defoe's life was by no means his only focus.

Defoe began his campaign in The Review and other pamphlets aimed at English opinion, claiming that it would end the threat from the north, gaining for the Treasury an "inexhaustible treasury of men", a valuable new market increasing the power of England. By September 1706, Harley ordered Defoe to Edinburgh as a secret agent to do everything possible to help secure acquiescence in the Treaty of Union. He was conscious of the risk to himself. Thanks to books such as The Letters of Daniel Defoe (edited by G. H. Healey, Oxford 1955), far more is known about his activities than is usual with such agents.

For Scotland, he used different arguments, even the opposite of those which he used in England, usually ignoring the English doctrine of the Sovereignty of Parliament, for Example, telling the Scots that they could have complete confidence in the guarantees in the Treaty. Some of his pamphlets were purported to be written by Scots, misleading even reputable historians into quoting them as evidence of Scottish opinion of the time. The same is true of a massive history of the Union which Defoe published in 1709 and which some historians still treat as a valuable contemporary source for their own works. Defoe took pains to give his history an air of objectivity by giving some space to arguments against the Union but always having the last word for himself.

The extent and particulars are widely contested concerning Defoe's writing in the period from the Tory fall in 1714 to the publication of Robinson Crusoe in 1719. Defoe comments on the tendency to attribute tracts of uncertain authorship to him in his apologia Appeal to Honour and Justice (1715), a defence of his part in Harley's Tory ministry (1710–14). Other works that anticipate his novelistic career include The Family Instructor (1715), a conduct manual on religious duty; Minutes of the Negotiations of Monsr. Mesnager (1717), in which he impersonates Nicolas Mesnager, the French plenipotentiary who negotiated the Treaty of Utrecht (1713); and A Continuation of the Letters Writ by a Turkish Spy (1718), a satire of European politics and religion, ostensibly written by a Muslim in Paris.

Defoe's novel Robinson Crusoe (1719), written when he was in his late fifties, relates the story of a man's shipwreck on a desert island for twenty-eight years and his subsequent adventures. Throughout its episodic narrative, Crusoe's struggles with faith are apparent as he bargains with God in times of life-threatening crises, but time and again he turns his back after his deliverances. He is finally content with his lot in life, separated from society, following a more genuine conversion experience. Usually read as fiction, a coincidence of background geography suggests that this may be non-fiction. In the opening pages of The Farther Adventures of Robinson Crusoe, the author describes how Crusoe settled in Bedford, married and produced a family, and that when his wife died, he went off on these further adventures. Bedford is also the place where the brother of "H. F." in A Journal of the Plague Year retired to avoid the danger of the plague, so that by implication, if these works were not fiction, Defoe's family met Crusoe in Bedford, from whence the information in these books was gathered. Defoe went to school in Stoke Newington, London, with a friend named Caruso.

Memoirs of a Cavalier (1720) is set during the Thirty Years' War and the English Civil War.

Also in 1722, Defoe wrote Moll Flanders, another first-person picaresque novel of the fall and eventual redemption, both material and spiritual, of a lone woman in 17th-century England. The titular heroine appears as a whore, bigamist, and thief, lives in The Mint, commits adultery and Incest, and yet manages to retain the reader's sympathy. Her savvy manipulation of both men and wealth earns her a life of trials but ultimately an ending in reward. Although Moll struggles with the morality of some of her actions and decisions, religion seems to be far from her concerns throughout most of her story. However, like Robinson Crusoe, she finally repents. Moll Flanders is an important work in the development of the novel, as it challenged the Common perception of femininity and gender roles in 18th-century British society.

Moll Flanders and Defoe's final novel, Roxana: The Fortunate Mistress (1724), are examples of the remarkable way in which Defoe seems to inhabit his fictional characters (yet "drawn from life"), not least in that they are women. Roxana narrates the moral and spiritual decline of a high society courtesan. Roxana differs from other Defoe works because the main character does not exhibit a conversion experience, even though she claims to be a penitent later in her life, at the time that she's relaying her story.

Published in 1726, The Complete English Tradesman is an Example of Defoe's political works. He discusses the role of the tradesman in England in comparison to tradesmen internationally, arguing that the British system of trade is far superior. He also implies that trade is the backbone of the British economy: "estate's a pond, but trade's a spring." He praises the practicality of trade not only within the economy but the social stratification as well. Most of the British gentry, he argues is at one time or another inextricably linked with the institution of trade, either through personal experience, marriage or genealogy. Oftentimes younger members of noble families entered into trade. Marriage to a tradesman's daughter by a nobleman was also Common. Overall Defoe demonstrated a high respect for tradesmen, being one himself.

Daniel Defoe died on 24 April 1731, probably while in hiding from his creditors. He often was in debtors' prison. The cause of his death was labelled as lethargy, but he probably experienced a stroke. He was interred in Bunhill Fields (today Bunhill Fields Burial and Gardens), Borough of Islington, London, where a monument was erected to his memory in 1870.

The novel has been assumed to be based in part on the story of the Scottish castaway Alexander Selkirk, who spent four years stranded in the Juan Fernández Islands, but this is inconsistent with the details of the narrative. The island Selkirk lived on was named Más a Tierra (Closer to Land) at the time and was renamed Robinson Crusoe Island in 1966. It has been supposed that Defoe may have also been inspired by the Latin or English translation of a book by the Andalusian-Arab Muslim polymath Ibn Tufail, who was known as "Abubacer" in Europe. The Latin edition of the book was entitled Philosophus Autodidactus and it was an earlier novel that is also set on a deserted island.

As many as 545 titles have been ascribed to Defoe, ranging from satirical poems, political and religious pamphlets, and volumes. (Furbank and Owens argue for the much smaller number of 276 published items in Critical Bibliography (1998).)

Defoe was a prolific and versatile Writer, producing more than three hundred works—books, pamphlets, and journals—on diverse topics, including politics, crime, religion, marriage, psychology, and the supernatural. He was also a pioneer of Business journalism and economic journalism.