Priestley was born at 34 Mannheim Road, Manningham, which he described as an "extremely respectable" suburb of Bradford. His father was a headmaster. His mother died when he was just two years old and his father remarried four years later. Priestley was educated at Belle Vue Grammar School, which he left at sixteen to work as a junior clerk at Helm & Co., a wool firm in the Swan Arcade. During his years at Helm & Co. (1910–1914), he started writing at night and had articles published in local and London newspapers. He was to draw on memories of Bradford in many of the works he wrote after he had moved south, including Bright Day and When We Are Married. As an old man he deplored the destruction by developers of Victorian buildings in Bradford such as the Swan Arcade, where he had his first job.

Priestley served in the army during the First World War, volunteering to join the 10th Battalion, the Duke of Wellington's Regiment on 7 September 1914, and being posted to France as a Lance-Corporal on 26 August 1915. He was badly wounded in June 1916, when he was buried alive by a trench-mortar. He spent many months in military hospitals and convalescent establishments, and on 26 January 1918 was commissioned as an officer in the Devonshire Regiment, and posted back to France late summer 1918. As he describes in his literary reminiscences, Margin Released, he suffered from the effects of poison gas, and then supervised German prisoners of war, before being demobilized in early 1919.

He married three times. In 1921 he married Emily "Pat" Tempest, a music-loving Bradford librarian. Two daughters were born, one in 1923 and one in 1924, but in 1925 his wife died of cancer. In September 1926, he married Jane Wyndham-Lewis (ex-wife of the original 'Beachcomber' D. B. Wyndham-Lewis, no relation to the Artist Wyndham Lewis); they had two daughters (including music therapist Mary Priestley) and one son. In 1953, he divorced his second wife then married the archaeologist and also Writer Jacquetta Hawkes, with whom he collaborated on the play Dragon's Mouth.

After his military Service, Priestley received a university education at Trinity Hall, Cambridge. By the age of 30 he had established a reputation as an Essayist and critic. His novel Benighted (1927) was adapted into the James Whale film The Old Dark House (1932); the novel has been published under the film's name in the United States.

Priestley's first major success came with a novel, The Good Companions (1929), which earned him the James Tait Black Memorial Prize for fiction and made him a national figure. His next novel, Angel Pavement (1930), further established him as a successful Novelist. However, some critics were less than complimentary about his work, and Priestley threatened legal action against Graham Greene for what he took to be a defamatory portrait of him in the novel Stamboul Train (1932).

He moved into a new genre and became equally well known as a dramatist. Dangerous Corner (1932) was the first of many plays that would enthrall West End theatre audiences. His best-known play is An Inspector Calls (1945). His plays are more varied in tone than the novels, several being influenced by J. W. Dunne's theory of time, which plays a part in the plots of Dangerous Corner (1932) and Time and the Conways".

In 1934 he published the travelogue English Journey, an account of what he saw and heard while travelling through the country in the depths of the Depression.

During the Second World War, he was a regular broadcaster on the BBC. The Postscript, broadcast on Sunday night through 1940 and again in 1941, drew peak audiences of 16 million; only Churchill was more popular with listeners. Graham Greene wrote that Priestley "became in the months after Dunkirk a leader second only in importance to Mr. Churchill. And he gave us what our other Leaders have always failed to give us – an ideology." But his talks were cancelled. It was thought that this was the effect of complaints from Churchill that they were too left-wing; however, in 2015 Priestley's son said in a talk on the latest book being published about his father's life that it was in fact Churchill's Cabinet that brought about the cancellation by supplying negative reports on the broadcasts to Churchill.

In 1941 he played an important part in organising and supporting a fund-raising campaign on behalf of the London Philharmonic Orchestra, which was struggling to establish itself as a self-governing body after the withdrawal of Sir Thomas Beecham. In 1949 the opera The Olympians by Arthur Bliss, to a libretto by Priestley, was premiered.

He is perhaps best known for his 1945 play An Inspector Calls.

Priestley had a deep love for classical music especially chamber music. This love is reflected in a number of Priestley's works, notably his own favourite novel Bright Day (Heinemann, 1946). His book Trumpets Over the Sea is subtitled "a rambling and egotistical account of the London Symphony Orchestra's engagement at Daytona Beach, Florida, in July–August 1967".

Priestley's name was on Orwell's list, a list of people which George Orwell prepared in March 1949 for the Information Research Department (IRD), a propaganda unit set up at the Foreign Office by the Labour government. Orwell considered these people to have pro-communist leanings and therefore to be inappropriate to write for the IRD.

He was a founding member of the Campaign for Nuclear Disarmament in 1958.

Priestley began placing his papers at the Harry Ransom Center at the University of Texas at Austin in 1960, with additions being made throughout his lifetime. The Center has continued to add to the collection through gifts and purchases when possible. The collection currently amounts to roughly 23 boxes, and includes original manuscripts for many of his works and an extensive series of correspondence.

His interest in the Problem of time led him to publish an extended essay in 1964 under the title of Man and Time (Aldus published this as a companion to Carl Jung's Man and His Symbols). In this book he explored in depth various theories and beliefs about time as well as his own research and unique conclusions, including an analysis of the phenomenon of precognitive dreaming, based in part on a broad sampling of experiences gathered from the British public, who responded enthusiastically to a televised appeal he made while being interviewed in 1963 on the BBC programme, Monitor.

Priestley snubbed the chance to become a lord in 1965 and also declined appointment as a Companion of Honour in 1969. But he did become a member of the Order of Merit in 1977. He also served as a British delegate to UNESCO conferences. He was honoured by the universities of Birmingham and Bradford, and the city of Bradford granted him Freedom of the City in 1973.

The University of Bradford awarded Priestley the title of honorary Doctor of Letters in 1970, and he was awarded the Freedom of the City of Bradford in 1973. His connections with the city were also marked by the naming of the J. B. Priestley Library at the University of Bradford, which he officially opened in 1975, and by the larger-than-life statue of him, commissioned by the Bradford City Council after his death, and which now stands in front of the National Media Museum.