Schaeffer was born on January 30, 1912, in Germantown, Pennsylvania, to Franz A. Schaeffer III and Bessie Williamson. He was of German and English ancestry.

In 1935, Schaeffer graduated magna cum laude from Hampden–Sydney College. The same year he married Edith Seville, the daughter of missionary parents who had been with the China Inland Mission founded by Hudson Taylor. Schaeffer then enrolled at Westminster Theological Seminary in the fall and studied under Cornelius Van Til (presuppositional apologetics) and J. Gresham Machen (doctrine of inerrancy).

In 1937, Schaeffer transferred to Faith Theological Seminary, graduating in 1938. This seminary was newly formed as a result of a split between the Presbyterian Church of America (now the Orthodox Presbyterian Church) and the Bible Presbyterian Church, a Presbyterian denomination more identified with Fundamentalist Christianity and premillennialism. Schaeffer was the first student to graduate and the first to be ordained in the Bible Presbyterian Church. He served pastorates in Pennsylvania (Grove City and Chester) and St. Louis, Missouri. Schaeffer eventually sided with the Bible Presbyterian Church Columbus Synod following the BPC Collingswood and BPC Columbus Split and became a member of the Reformed Presbyterian Church, Evangelical Synod when the Bible Presbyterian Church's Columbus Synod merged with the Reformed Presbyterian Church's Columbus Synod in 1965, a denomination which would merge with the Presbyterian Church in America, in 1982.

Schaeffer's approach to Christian apologetics was primarily influenced by Herman Dooyeweerd, Edward John Carnell, and Cornelius Van Til, but he was not known to be a strict presuppositionalist in the Van Tillian tradition. His approach to culture was heavily influenced by his friendship with Hans Rookmaaker. In a 1948 article in The Bible Today, Schaeffer explained his own apologetics and how he walked a middle path between evidentialism and presuppositionalism, noting that "If the unsaved man was consistent he would be an atheist in religion, an irrationalist in philosophy (including a complete uncertainty concerning 'natural laws'), and completely a-moral in the widest sense." J. Budziszewski summarizes the article about this middle path approach by writing:

Schaeffer received numerous honorary degrees. In 1954, he was awarded an honorary Doctor of Divinity degree from Highland College in Long Beach, California. In 1971, he received an honorary Doctor of Letters degree from Gordon College in Wenham, Massachusetts. In 1982, John Warwick Montgomery nominated Schaeffer for an honorary Doctor of Laws degree, which was conferred in 1983 by the Simon Greenleaf School of Law, Anaheim, California in recognition of his apologetic writings and ministry.

In the 1960s Schaeffer read the works of Reconstructionist theologian Rousas John Rushdoony with appreciation, and according to Barry Hankins, "it is quite likely that Schaeffer's belief that the United States was founded on a Christian base came in part from Rushdoony." Schaeffer later lost this fervor because Rushdoony was a postmillennialist (holding the doctrine that the kingdom of God will be built on earth before the second coming of Jesus) while Schaeffer was a premillennialist (holding that the kingdom of God will only be ushered in with the second coming). Further Schaeffer thought that Rushdoony's system would require a merger of church and state, which he opposed. He held that the principles, not the actual details, of Old Testament civil law were applicable under the New Covenant of Jesus. He wrote "The moral law [of the Old Testament], of course, is constant, but the civil law only was operative for the Old Testament theocracy. I do not think there is any indication of a theocracy in the New Testament until Christ returns as king."

Francis Schaeffer is credited with helping spark a return to political activism among Protestant evangelicals and fundamentalists in the late 1970s and early 1980s, especially in relation to the issue of abortion. In his memoir Crazy for God, Schaeffer's son Frank takes credit for pressing his father to take on the abortion issue, which Schaeffer initially considered "too political". Schaeffer called for a challenge to what he saw as the increasing influence of secular humanism. Schaeffer's views were expressed in two works, his book entitled A Christian Manifesto, as well as the book and film series, Whatever Happened to the Human Race?.

The American distribution of the How Should We Then Live: The Rise and Decline of Western Thought and Culture book, the U.S. distribution of the film of the same title by Zeoli's Gospel Films, Inc., and subsequent film tour in the United States by the Schaeffers was responsible for bringing many evangelical Protestants into the then largely Roman Catholic public protest movement against the United States Supreme Court Roe v. Wade decision, 410 U.S. 113 (1973) supporting legal abortion in the United States.

In 1978, Schaeffer asked a group of Reformed Episcopal Clergy to research his thoughts and current trends, forming a church guild called "The Society of Reformed Philosophical Thinkers". This was merged in 1988 with "Into Thy Word Ministries", which was then transformed into "The Francis A. Schaeffer Institute of Church Leadership Development" in 1998. Its purpose is to strategize how to reach and train Pastors and church Leaders to focus on Christ centered principles. Its aim is to point the church back to "true-Truth" and "true spirituality". The foundation develops comprehensive curriculum for Pastors, church planters and church Leaders.

Sara Diamond and Frederick Clarkson have written articles tracing the activism of numerous key figures in the Christian Right to the influence of Francis Schaeffer. According to Diamond: "The idea of taking dominion over secular society gained widespread currency with the 1981 publication of...Schaeffer's book A Christian Manifesto. The book sold 290,000 copies in its first year, and it remains one of the movement's most frequently cited texts." Diamond summarizes the book and its importance to the Christian Right:

In addition to his books, one of the last public lectures Schaeffer delivered was at the Law Faculty, University of Strasbourg. It was published as "Christian Faith and Human Rights", The Simon Greenleaf Law Review, 2 (1982–83) pp. 3–12. Most of his writings during his Bible Presbyterian days have not been collected, nor reprinted in decades.

Schaeffer died of lymphoma on May 15, 1984, in Rochester, Minnesota.

Beginning in the 1990s, critics began exploring the intellectual and ideological connection between Schaeffer's political activism and writings of the early 1980s to contemporary religious-political trends in the Christian Right, sometimes grouped under the name Dominionism, with mixed conclusions.

Congresswoman and 2012 United States presidential candidate Michele Bachmann has cited Schaeffer's documentary series How Should We Then Live? as having a "profound influence" on her life and that of her husband Marcus.