Gershwin was of Russian Jewish and Ukrainian Jewish ancestry. His grandfather, Jakov Gershowitz, had served for 25 years as a mechanic for the Imperial Russian Army to earn the right of free travel and residence as a Jew; finally retiring near Saint Petersburg. His teenage son, Moishe Gershowitz, worked as a leather cutter for women's shoes. Moishe Gershowitz met and fell in love with Roza Bruskina, the teenage daughter of a furrier in Vilnius. She and her family moved to New York due to increasing anti-Jewish sentiment in Russia, changing her first name to Rose. Moishe, faced with compulsory military Service if he remained in Russia, moved to America as soon as he could afford to. Once in New York, he changed his first name to Morris. Gershowitz lived with a maternal uncle in Brooklyn, working as a foreman in a women's shoe factory. He married Rose on July 21, 1895, and Gershowitz soon Americanized his name to Gershwine. Their first child, Ira Gershwin, was born on December 6, 1896, after which the family moved into a second-floor apartment on Brooklyn's Snediker Avenue.

On September 26, 1898, George was born as second son to Morris and Rose Bruskin Gershwine in their second-floor apartment on Brooklyn's Snediker Avenue. His birth certificate identifies him as Jacob Gershwine, with the surname pronounced 'Gersh-vin' in the Russian and Yiddish immigrant community. He had just one given name, contrary to the American practice of giving children both a first and middle name. He was named after his grandfather, a one time Russian army mechanic. He soon became known as George, and changed the spelling of his surname to 'Gershwin' about the time he became a professional musician; other family members followed suit. After Ira and George, another boy Arthur Gershwin (1900–1981), and a girl Frances Gershwin (1906–1999) were born into the family.

George lived a usual childhood existence for children of New York tenements: running around with his boyhood friends, roller skating and misbehaving in the streets. Remarkably, until 1908, he cared nothing for music, when as a ten year old he was intrigued upon hearing his friend Maxie Rosenzweig's, violin recital. The sound, and the way his friend played, captured him. At around the same time, George's parents had bought a piano, for lessons, for his older brother Ira, but to his parents' surprise, and Ira's relief, it was George who spent more time playing it.

In the late 1910s, Gershwin met Songwriter and music Director william Daly. The two collaborated on the Broadway musicals Piccadilly to Broadway (1920) and For Goodness' Sake (1922), and jointly composed the score for Our Nell (1923). This was the beginning of a long friendship. Daly was a frequent arranger, orchestrator and Conductor of Gershwin's music, and Gershwin periodically turned to him for musical advice.

With a degree of frustration, George tried various piano teachers for some two (circa. 1911) before finally being introduced to Charles Hambitzer by Jack Miller (circa. 1913), the Pianist in the Beethoven Symphony Orchestra. Until his death in 1918, Hambitzer remained Gershwin's musical mentor and taught him conventional piano technique, introduced him to music of the European classical tradition, and encouraged him to attend orchestral concerts. Following such concerts, young Gershwin would essentially try to play, on the piano at home, the music he had heard from recall, and without sheet music. As a matter of course, Gershwin later studied with the classical Composer Rubin Goldmark and avant-garde composer-theorist Henry Cowell, thus formalizing his classical music training.

In 1913, Gershwin left school at the age of 15 and found his first job as a "song plugger". His employer was Jerome H. Remick and Company, a Detroit-based publishing firm with a branch office on New York City's Tin Pan Alley, and he earned $15 a week.

In 1916, Gershwin started working for Aeolian Company and Standard Music Rolls in New York, recording and arranging. He produced dozens, if not hundreds, of rolls under his own and assumed names (pseudonyms attributed to Gershwin include Fred Murtha and Bert Wynn). He also recorded rolls of his own compositions for the Duo-Art and Welte-Mignon reproducing pianos. As well as recording piano rolls, Gershwin made a brief foray into vaudeville, accompanying both Nora Bayes and Louise Dresser on the piano. His 1917 novelty ragtime, "Rialto Ripples", was a commercial success.

Compared to the piano rolls, there are few accessible audio recordings of Gershwin's playing. His first recording was his own "Swanee" with the Fred Van Eps Trio in 1919. The recorded balance highlights the banjo playing of Van Eps, and the piano is overshadowed. The recording took place before "Swanee" became famous as an Al Jolson specialty in early 1920.

Early in his career, under both his own name and pseudonyms, Gershwin recorded more than one hundred and forty player piano rolls which were a main source of his income. The majority were popular music of the period and a smaller proportion were of his own works. Once his musical theatre-writing income became substantial, his regular roll-recording career became superfluous. He did record additional rolls throughout the 1920s of his main hits for the Aeolian Company's reproducing piano, including a complete version of his Rhapsody in Blue.

Gershwin died intestate, and his estate passed to his mother. The estate continues to collect significant royalties from licensing the copyrights on his work. The estate supported the Sonny Bono Copyright Term Extension Act because its 1923 cutoff date was shortly before Gershwin had begun to create his most popular works. The copyrights on all Gershwin's solo works expired at the end of 2007 in the European Union, based on its life-plus-70-years rule.

Gershwin recorded an abridged version of Rhapsody in Blue with Paul Whiteman and his orchestra for the Victor Talking Machine Company in 1924, soon after the world premiere. Gershwin and the same orchestra made an electrical recording of the abridged version for Victor in 1927. However, a dispute in the studio over interpretation angered Whiteman and he left. The conductor's baton was taken over by Victor's staff Conductor Nathaniel Shilkret.

Aside from the French influence, Gershwin was intrigued by the works of Alban Berg, Dmitri Shostakovich, Igor Stravinsky, Darius Milhaud, and Arnold Schoenberg. He also asked Schoenberg for composition lessons. Schoenberg refused, saying "I would only make you a bad Schoenberg, and you're such a good Gershwin already." (This quote is similar to one credited to Maurice Ravel during Gershwin's 1928 visit to France – "Why be a second-rate Ravel, when you are a first-rate Gershwin?") Gershwin was particularly impressed by the music of Berg, who gave him a score of the Lyric Suite. He attended the American premiere of Wozzeck, conducted by Leopold Stokowski in 1931, and was "thrilled and deeply impressed".

Gershwin made a number of solo piano recordings of tunes from his musicals, some including the vocals of Fred and Adele Astaire, as well as his Three Preludes for piano. In 1929, Gershwin "supervised" the world premiere recording of An American in Paris with Nathaniel Shilkret and the Victor Symphony Orchestra. Gershwin's role in the recording was rather limited, particularly because Shilkret was conducting and had his own ideas about the music. When it was realized that no one had been hired to play the brief celeste solo, Gershwin was asked if he could and would play the instrument, and he agreed. Gershwin can be heard, rather briefly, on the recording during the slow section.

A 74-second newsreel film clip of Gershwin playing I Got Rhythm has survived, filmed at the opening of the Manhattan Theater (now The Ed Sullivan Theater) in August 1931. There are also silent home movies of Gershwin, some of them shot on Kodachrome color film stock, which have been featured in tributes to the Composer. In addition, there is newsreel footage of Gershwin playing "Mademoiselle from New Rochelle" and "Strike Up the Band" on the piano during a Broadway rehearsal of the 1930 production of Strike Up the Band. In the mid-30s, "Strike Up The Band" was given to UCLA to be used as a football fight song, "Strike Up The Band for UCLA". The comedy team of Clark and McCullough are seen conversing with Gershwin, then singing as he plays.

Russian Joseph Schillinger's influence as Gershwin's Teacher of composition (1932–1936) was substantial in providing him with a method of composition. There has been some disagreement about the nature of Schillinger's influence on Gershwin. After the posthumous success of Porgy and Bess, Schillinger claimed he had a large and direct influence in overseeing the creation of the opera; Ira completely denied that his brother had any such assistance for this work. A third account of Gershwin's musical relationship with his Teacher was written by Gershwin's close friend Vernon Duke, also a Schillinger student, in an article for the Musical Quarterly in 1947.

In 1934, in an effort to earn money to Finance his planned folk opera, Gershwin hosted his own radio program titled Music by Gershwin. The show was broadcast on the NBC Blue Network from February to May and again in September through the final show on December 23, 1934. He presented his own work as well as the work of other composers. Recordings from this and other radio broadcasts include his Variations on I Got Rhythm, portions of the Concerto in F, and numerous songs from his musical comedies. He also recorded a run-through of his Second Rhapsody, conducting the orchestra and playing the piano solos. Gershwin recorded excerpts from Porgy and Bess with members of the original cast, conducting the orchestra from the keyboard; he even announced the selections and the names of the performers. In 1935 RCA Victor asked him to supervise recordings of highlights from Porgy and Bess; these were his last recordings.

The action takes place in the fictional, African-American neighborhood of Catfish Row, Charleston, South Carolina. With the exception of several minor speaking roles, all of the characters are African-American. The music combines elements of popular music of the day, with a strong influence of African-American music, of the period, with techniques typical of opera, such as recitative, through-composition and an extensive system of leitmotifs. Porgy and Bess contains some of Gershwin's most sophisticated music, including a fugue, a passacaglia, the use of atonality, polytonality and polyrhythm, and a tone row. Even the "set numbers" (of which "Summertime", "I Got Plenty o' Nuttin'" and "It Ain't Necessarily So" are well known examples) are some of the most refined and ingenious of Gershwin's compositions. For the performances, Gershwin collaborated with Eva Jessye, whom he picked as the musical Director. The work was first performed in 1935; it was a box-office failure in the middle of the Great Depression.

After the commercial failure of Porgy and Bess, Gershwin moved to Hollywood, California. In 1936, he was commissioned by RKO Pictures to write the music for the film Shall We Dance, starring Fred Astaire and Ginger Rogers. Gershwin's extended score, which would marry ballet with jazz in a new way, runs over an hour in length. It took Gershwin several months to compose and orchestrate.

Gershwin's friends and fans were shocked and devastated. John O'Hara remarked: "George Gershwin died on July 11, 1937, but I don't have to believe it if I don't want to." He was interred at Westchester Hills Cemetery in Hastings-on-Hudson, New York. A memorial concert was held at the Hollywood Bowl on September 8, 1937, at which Otto Klemperer conducted his own orchestration of the second of Gershwin's Three Preludes.

In 1945, the film biography Rhapsody in Blue was made, starring Robert Alda as George Gershwin. The film contains many factual errors about Gershwin's life, but also features many examples of his music, including an almost complete performance of Rhapsody in Blue.

In 1965, Movietone Records released an album MTM 1009 featuring Gershwin's piano rolls of the titled George Gerswhin plays RHAPSODY IN BLUE and his other favorite compositions. The B-side of the LP featured nine other recordings.

In 1975, Columbia Records released an album featuring Gershwin's piano rolls of Rhapsody In Blue, accompanied by the Columbia Jazz Band playing the original jazz band accompaniment, conducted by Michael Tilson Thomas. The B-side of the Columbia Masterworks release features Tilson Thomas leading the New York Philharmonic in An American In Paris.

In 1976, RCA Records, as part of its "Victrola Americana" line, released a collection of Gershwin recordings taken from 78s recorded in the 1920s and called the LP "Gershwin plays Gershwin, Historic First Recordings" (RCA Victrola AVM1-1740). Included were recordings of "Rhapsody in Blue" with the Paul Whiteman Orchestra and Gershwin on piano; "An American in Paris", from 1927 with Gershwin on celesta; and "Three Preludes", "Clap Yo' Hands" and Someone to Watch Over Me", among others. There are a total of ten recordings on the album. At the opening ceremony of the 1984 Olympic Games in Los Angeles, "Rhapsody in Blue" was performed in spectacular fashion by many Pianists.

The Soundtrack to Woody Allen's 1979 film Manhattan is composed entirely of Gershwin's compositions, including Rhapsody in Blue, "Love is Sweeping the Country", and "But Not for Me", performed by both the New York Philharmonic under Zubin Mehta and the Buffalo Philharmonic under Michael Tilson Thomas. The film begins with a monologue by Allen: "He adored New York City ... To him, no matter what the season was, this was still a town that existed in black and white and pulsated to the great tunes of George Gershwin."

In 1998, two audio CDs featuring piano rolls recorded by Gershwin were issued by Nonesuch Records through the efforts of Artis Wodehouse, and entitled Gershwin Plays Gershwin: The Piano Rolls.

In 2005, The Guardian determined using "estimates of earnings accrued in a composer's lifetime" that George Gershwin was the wealthiest Composer of all time.

In 2007, the Library of Congress named their Prize for Popular Song after George and Ira Gershwin. Recognizing the profound and positive effect of popular music on culture, the prize is given annually to a Composer or performer whose lifetime contributions exemplify the standard of excellence associated with the Gershwins. On March 1, 2007, the first Gershwin Prize was awarded to Paul Simon.

In October 2009, it was reported by Rolling Stone that Brian Wilson was completing two unfinished compositions by George Gershwin, released as Brian Wilson Reimagines Gershwin on August 17, 2010, consisting of ten George and Ira Gershwin songs, bookended by passages from "Rhapsody in Blue", with two new songs completed from unfinished Gershwin fragments by Wilson and band member Scott Bennett.

In September 2013, a partnership between the estates of Ira and George Gershwin and the University of Michigan was created and will provide the university's School of Music, Theatre, and Dance access to Gershwin's entire body of work, which includes all of Gershwin's papers, compositional drafts, and scores. This direct access to all of his works will provide opportunities to Musicians, composers, and scholars to analyze and reinterpret his work with the goal of accurately reflecting the composers' vision in order to preserve his legacy. The first fascicles of The Gershwin Critical Edition, edited by Mark Clague, are expected in 2017; they will cover the 1924 jazz band version of Rhapsody in Blue, An American in Paris and Porgy and Bess.