After earning high school valedictorian honors at Spalding Institute in Peoria in 1913, Sheen was educated at St. Viator College in Bourbonnais, Illinois, attended Saint Paul Seminary in Minnesota before his ordination on September 20, 1919, then followed that with further studies at The Catholic University of America in Washington, D.C. His youthful appearance was still evident on one occasion when a local priest asked Sheen to assist as altar boy during the celebration of the Mass.

Sheen earned a Doctor of Philosophy at the Catholic University of Leuven in Belgium in 1923. His thesis was titled, "The Spirit of Contemporary Philosophy and the Finite God." While at Leuven, he became the first American ever to win the Cardinal Mercier award for the best philosophical treatise. In 1924 Sheen pursued further studies in Rome earning a Sacred Theology Doctorate at the Pontificium Collegium Internationale Angelicum, the Future Pontifical University of Saint Thomas Aquinas, Angelicum.

A popular instructor, Sheen wrote the first of 73 books in 1925, and in 1930 began a weekly NBC Sunday night radio broadcast, The Catholic Hour. Sheen called World War II not only a political struggle, but also a "theological one." He referred to Hitler as an Example of the "Anti-Christ." Two decades later, the broadcast had a weekly listening audience of four million people. Time referred to him in 1946 as "the golden-voiced Msgr. Fulton J. Sheen, U.S. Catholicism's famed proselytizer" and reported that his radio broadcast received 3,000–6,000 letters weekly from listeners. During the middle of this era, he conducted the first religious Service broadcast on the new medium of television, putting in motion a new avenue for his religious pursuits.

Sheen was for a year assistant to the pastor at St. Patrick's Church, Soho Square in London while teaching theology at St. Edmund's College, Ware, where he met Ronald Knox. Although Oxford and Columbia wanted him to teach philosophy, in 1926 Bishop Edmund Dunne of the Roman Catholic Diocese of Peoria, Illinois, asked Sheen to take over St. Patrick's parish. After nine months, Dunne returned him to Catholic University, where he taught philosophy until 1950.

In 1929, Sheen gave a speech at the National Catholic Educational Association. He encouraged teachers to "educate for a Catholic Renaissance" in the United States. Sheen was hoping that Catholics would become more influential in their country through education, which would help attract others to the faith. He believed that Catholics should "integrate" their faith into the rest of their daily life.

For 20 years as Father Sheen, later Monsignor, he hosted the night-time radio program The Catholic Hour on NBC (1930–1950) before moving to television and presenting Life Is Worth Living (1951–1957). Sheen's final presenting role was on the syndicated The Fulton Sheen Program (1961–1968) with a format very similar to that of the earlier Life is Worth Living show. For this work, Sheen twice won an Emmy Award for Most Outstanding Television Personality, and was featured on the cover of Time Magazine. Starting in 2009, his shows were being re-broadcast on the EWTN and the Trinity Broadcasting Network's Church Channel cable networks. Due to his contribution to televised preaching Sheen is often referred to as one of the first Televangelists.

Arroyo relates that "In the late 1950s the government donated millions of dollars' worth of powdered milk to the New York Archdiocese. In turn, Cardinal Spellman handed that milk over to the Society for the Propagation of the Faith to distribute to the poor of the world. On at least one occasion he demanded that the Director of the Society, Bishop Sheen, pay the Archdiocese for the donated milk. He wanted millions of dollars. Despite Cardinal Spellman's considerable powers of persuasion and influence in Rome, Sheen refused. These were funds donated by the public to the missions, funds Sheen himself had personally contributed to and raised over the airwaves. He felt an obligation to protect them, even from the itchy fingers of his own Cardinal."

In 1951 he began a weekly television program on the DuMont Television Network titled Life Is Worth Living. Filmed at the Adelphi Theatre in New York City, the program consisted of the unpaid Sheen simply speaking in front of a live audience without a script or cue cards, occasionally using a chalkboard.

The show, scheduled in a graveyard slot on Tuesday nights at 8:00 p.m., was not expected to challenge the ratings giants Milton Berle and Frank Sinatra, but did surprisingly well. Berle, known to many early television viewers as "Uncle Miltie" and for using ancient vaudeville material, joked about Sheen, "He uses old material, too", and observed that "[i]f I'm going to be eased off the top by anyone, it's better that I lose to the One for whom Bishop Sheen is speaking." Sheen responded in jest that maybe people should start calling him "Uncle Fultie". Life and Time magazine ran feature stories on Bishop Sheen. The number of stations carrying Life Is Worth Living jumped from three to fifteen in less than two months. There was fan mail that flowed in at a rate of 8,500 letters per week. There were four times as many requests for tickets as could be fulfilled. Admiral, the sponsor, paid the production costs in return for a one-minute commercial at the opening of the show and another minute at the close. In 1952 Sheen won an Emmy Award for his efforts, accepting the acknowledgment by saying, "I feel it is time I pay tribute to my four writers—Matthew, Mark, Luke and John." When Sheen won the Emmy, Berle quipped, "We both work for 'Sky Chief'", a reference to Berle's sponsor Texaco. Time called him "the first 'televangelist'", and the Archdiocese of New York could not meet the demand for tickets.

One of his best-remembered presentations came in February 1953, when he forcefully denounced the Soviet regime of Joseph Stalin. Sheen gave a dramatic reading of the burial scene from Shakespeare's Julius Caesar, substituting the names of prominent Soviet Leaders Stalin, Lavrenty Beria, Georgy Malenkov, and Andrey Vyshinsky for the original Caesar, Cassius, Marc Antony, and Brutus. He concluded by saying, "Stalin must one day meet his judgment." The dictator suffered a stroke a few days later and died within a week.

The show ran until 1957, drawing as many as 30 million people on a weekly basis. In 1958, Sheen became national Director of the Society for the Propagation of the Faith, serving for eight years before being appointed Bishop of the Diocese of Rochester, New York, on October 26, 1966. He also hosted a nationally syndicated series, The Fulton Sheen Program, from 1961 to 1968 (first in black and white and then in color). The format of this series was essentially the same as Life Is Worth Living.

While serving in Rochester, he created the Sheen Ecumenical Housing Foundation, which survives to this day. He also spent some of his Energy on political activities such as his denunciation of the Vietnam War in late July 1967. On Ash Wednesday in 1967, Sheen decided to give St. Bridget's Parish building to the federal Housing and Urban Development program. Sheen wanted to let the government use it for black Americans. There was a protest since Sheen acted on his own accord. The pastor disagreed, saying that "There is enough empty property around without taking down the church and the school." The deal fell through.

On October 15, 1969, one month after celebrating his 50th anniversary as a priest, Sheen resigned from his position and was then appointed Archbishop of the titular see of Newport, Wales (Latin: Neoportus) by Pope Paul VI. This ceremonial position gave him a promotion to Archbishop and thus helped to allow Sheen to continue his extensive writing. Archbishop Sheen wrote 73 books and numerous articles and columns.

In September 1974, the Archbishop of Washington asked Sheen to be the speaker for a retreat for diocesan Priests at the Loyola Retreat House in Faulkner, Maryland. This was recorded on reel-to-reel tape, state of the art at the time.

Beginning in 1977 Sheen "underwent a series of surgeries that sapped his strength and even made preaching difficult." Throughout this time he continued to work on his autobiography, parts of which "were recited from his sickbed as he clutched a crucifix." Soon after an open-heart surgery at Lenox Hill Hospital, Sheen died on December 9, 1979 in his private chapel in the presence of the Blessed Sacrament. He is interred in the crypt of St. Patrick's Cathedral, near the deceased Archbishops of New York.

The Archbishop Fulton J. Sheen Foundation was formed in 1998 by Gregory J. Ladd and Lawrence F. Hickey to make known the life of the archbishop. The foundation approached Cardinal John O'Connor of the Archdiocese of New York for permission to commence the process of for cause, which was under the authority of the Diocese of Peoria.

In 2002, Sheen's Cause for Canonization as a saint was officially opened by Bishop Daniel R. Jenky, C.S.C., Bishop of the Diocese of Peoria, and from then on Sheen was referred to as a "Servant of God."

On February 2, 2008, the archives of Sheen were sealed at a ceremony during a special Mass at the Cathedral of Saint Mary of the Immaculate Conception in Peoria, Illinois, where the diocese was sponsoring his canonization.

In 2009, the diocesan phase of the investigation came to an end, and the records were sent to the Congregation for the Causes of Saints at the Vatican in Rome.

In November 2010, it was announced that the cause would be paused due to a disagreement with the Archdiocese of New York upon an unsettled debate concerning the return of Sheen's remains to the Diocese of Peoria.

On September 7, 2011, a tribunal of inquiry was sworn in to investigate the alleged healing. During a special Mass at 10:30 am on Sunday, December 11, 2011, at St. Mary's Cathedral in Peoria, the documentation gathered by the tribunal over nearly three months was boxed and sealed. It will then be shipped to the Vatican for consideration by the Congregation for the Causes of Saints, concluding the diocesan tribunal's work – which makes up much of the diocese's work on the project.

On Sunday, September 9, 2012, a Mass of Thanksgiving and banquet was held at St. Mary's Cathedral and the Spalding Pastoral Center in celebration of the advancement of Archbishop Sheen's cause, with Bishop Daniel R. Jenky, C.S.C., and his predecessor as Bishop of Peoria, Newark Archbishop John J. Myers (celebrating his 25th anniversary of episcopal ordination), in attendance, along with many of the clergy and religious of the diocese and from around the country. Copies of the "Positio", or the book detailing the documentation behind his cause, were presented to Archbishop Myers, to representatives of the Church in other states, and to a delegate from the Archdiocese of Chicago, and to other patrons and supporters of his cause. According to statements made during the Service by clergy connected to the Cause, the medical and theological study of the potential miracles needed for his beatification and canonization is currently well underway and at least one is seriously being considered. Due to new rules under Pope Benedict XVI stating that a beatification should occur locally, ideally in the candidate's home Diocese (which is usually but not always the Diocese that sponsors the Cause), it would likely take place in Peoria, the first there. Should he be beatified and canonized, he would be among a select few natives of the U.S. to hold that distinction.

According to Catholic News Service and The Catholic Post (the official newspaper of the Peoria Diocese), the case of a boy who as an infant had no discernible pulse for 61 minutes (who was about to be declared dead at OSF Saint Francis Medical Center in Peoria, Illinois, as a stillborn infant) and yet allegedly still lived to be healthy – without physical or mental impairment – is in the preliminary stages of being investigated as the possible miracle needed for Archbishop Sheen's potential beatification. If the miracle is approved at the diocesan level, and then by the Congregation for the Causes of Saints at the Vatican (being both medically unexplainable and directly attributable theologically to Sheen's intercession according to expert panels in both subject areas), then beatification may proceed. Another such miracle would be required for him to be considered for canonization as a saint.

However, on September 3, 2014, the cause was suspended indefinitely, not for problems with Sheen's moral character or with the miracle investigation, but because the Roman Catholic Archdiocese of New York, within whose territory he is buried, had refused a request by Bishop Jenky of Peoria (who is the Actor, or supervisor, of the cause efforts because of his position as Bishop of Peoria) to have Archbishop Sheen's remains moved to Peoria. This needed to be done so the body could be closely examined and first-class relics taken, both of which are among the final steps that take place before beatification and canonization. The cause for his beatification, per the Vatican's directions, will be archived in the historical records of the Congregation for Saints' Causes. The Peoria Diocese said there would be no further immediate comment.

In an action brought in New York Supreme Court, JOAN SHEEN CUNNINGHAM, Petitioner, v. TRUSTEES OF ST. PATRICK'S CATHEDRAL, ARCHDIOCESE OF NEW YORK, Respondents, Index No. 154933/2016, and decided November 16, 2016, Justice Arlene P. Bluth ordered the Archdiocese of New York to grant permission to Sheen's family to disinter Sheen's body finding a good and substantial reason for moving the remains of the decedent. The Court ruled that the Archdiocese's objection, that Sheen would not want the disinterment was without factual basis as neither his will nor the doctrine of the Catholic Church prohibited his transfer to Peoria. Given that his elevation to sainthood was being blocked until the Diocese of Peoria could petition for canonization the Court found the family had sufficient justification to move his body.