He was born in Cape Town, Cape Province, Union of South Africa, on 9 February 1940 to Afrikaner parents. His father, Zacharias Coetzee (1912–1988), was an occasional attorney and government employee, and his mother, Vera Coetzee (born Wehmeyer; 1904–1986), a schoolteacher. The family mainly spoke English at home, but John spoke Afrikaans with other relatives.

He then relocated to the United Kingdom, in 1962, worked as a computer programmer for IBM in London, and ICT (International Computers and Tabulators) in Bracknell staying until 1965. In 1963, while still in the UK, Coetzee was awarded a Master of Arts degree from the University of Cape Town for a thesis on the novels of Ford Madox Ford entitled "The Works of Ford Madox Ford with Particular Reference to the Novels" (1963). His experiences in England were later recounted in Youth (2002), his second volume of fictionalised memoirs.

He married Philippa Jubber in 1963 and divorced in 1980. He has a son, Nicolas (born 1966) and a daughter, Gisela (born 1968) from this marriage. Nicolas died in 1989 at the age of 23 in an accident.

Coetzee went to the University of Texas at Austin, in the United States, on the Fulbright Program in 1965, receiving his doctorate in 1969. His PhD dissertation was on computer stylistic analysis of the works of Samuel Beckett and was entitled "The English Fiction of Samuel Beckett: An Essay in Stylistic Analysis" (1968). In 1968, he began teaching English literature at the State University of New York at Buffalo where he stayed until 1971. It was at Buffalo that he began his first novel, Dusklands.

From as early as 1968 he sought permanent residence in the United States, a process that was finally unsuccessful, in part due to his involvement in protests against the war in Vietnam. In March 1970, he had been one of 45 faculty members who occupied the university's Hayes Hall and were subsequently arrested for Criminal trespass. The charges against the 45 were dropped in 1971. He then returned to South Africa to teach English literature at the University of Cape Town, where he was promoted Professor of General Literature in 1983 and was Distinguished Professor of Literature between 1999 and 2001.

He was the first Writer to be awarded the Booker Prize twice: first for Life & Times of Michael K in 1983, and again for Disgrace in 1999. Two other authors have since managed this — Peter Carey (in 1988 and 2001) and Hilary Mantel (in 2009 and 2012).

Along with André Brink and Breyten Breytenbach, Coetzee was, according to Fred Pfeil, at "the forefront of the anti-apartheid movement within Afrikaner literature and letters". On accepting the Jerusalem Prize in 1987, Coetzee spoke of the limitations of art in South African society, whose structures had resulted in "deformed and stunted relations between human beings" and "a deformed and stunted inner life". He went on to say that "South African literature is a literature in bondage. It is a less than fully human literature. It is exactly the kind of literature you would expect people to write from prison". He called on the South African government to abandon its apartheid policy. The scholar Isidore Diala states that J. M. Coetzee, Nadine Gordimer and André Brink are "three of South Africa's most distinguished white Writers, all with definite anti-apartheid commitment".

Following his Australian citizenship ceremony, Coetzee said that "I did not so much leave South Africa, a country with which I retain strong emotional ties, but come to Australia. I came because from the time of my first visit in 1991, I was attracted by the free and generous spirit of the people, by the beauty of the land itself and – when I first saw Adelaide – by the grace of the city that I now have the honour of calling my home." When he initially moved to Australia, he had cited the South African government's lax attitude to crime in that country as a reason for the move, leading to a spat with Thabo Mbeki, who, speaking of Coetzee's novel Disgrace stated that "South Africa is not only a place of rape". In 1999, the African National Congress submission to an investigation into racism in the media by the South African Human Rights Commission named Disgrace as a novel exploiting racist stereotypes. However, when Coetzee won his Nobel Prize, Mbeki congratulated him "on behalf of the South African nation and indeed the continent of Africa".

A three-time winner of the CNA Prize, Waiting for the Barbarians received both the James Tait Black Memorial Prize and the Geoffrey Faber Memorial Prize, Age of Iron was awarded the Sunday Express Book of the Year award, and The Master of Petersburg was awarded The Irish Times International Fiction Prize in 1995. He has also won the French Prix Femina Étranger, the Commonwealth Writers' Prize, and the 1987 Jerusalem Prize for the Freedom of the Individual in Society.

Coetzee spent most of his early life in Cape Town and in Worcester in Cape Province (modern-day Western Cape), as recounted in his fictionalised memoir, Boyhood (1997). The family moved to Worcester when he was eight, after his father had lost his government job. He attended St. Joseph's College, a Catholic school in the Cape Town suburb of Rondebosch, later studying mathematics and English at the University of Cape Town and receiving his Bachelor of Arts with Honours in English in 1960 and his Bachelor of Arts with Honours in Mathematics in 1961.

It has been argued that Coetzee's 1999 novel Disgrace allegorises South Africa's Truth and Reconciliation Commission. Asked about his views on the TRC, Coetzee stated, "In a state with no official religion, the TRC was somewhat anomalous: a court of a certain kind based to a large degree on Christian teaching and on a strand of Christian teaching accepted in their hearts by only a tiny proportion of the citizenry. Only the Future will tell what the TRC managed to achieve".

Upon retiring in 2002 and relocating to Adelaide, Australia, he was made an honorary research fellow at the English Department of the University of Adelaide, where his partner, Dorothy Driver, is a fellow academic and served as professor on the Committee on Social Thought at the University of Chicago until 2003.

On 2 October 2003, Horace Engdahl, head of the Swedish Academy, announced that Coetzee had been chosen as that year's recipient of the Nobel Prize in Literature, making him the fourth African Writer to be so honoured and the second South African after Nadine Gordimer. When awarding the prize, the Swedish Academy stated that Coetzee "in innumerable guises portrays the surprising involvement of the outsider". The press release for the award also cited his "well-crafted composition, pregnant dialogue and analytical brilliance," while focusing on the moral nature of his work. The prize ceremony was held in Stockholm on 10 December 2003.

The speech was for Voiceless, the animal protection institute, an Australian non-profit animal protection organization, of which he became a patron in 2004. Coetzee's fiction has similarly engaged with the problems of animal cruelty and animal welfare, in particular his books The Lives of Animals, Disgrace, Elizabeth Costello, and The Old Woman and the Cats. He is a vegetarian.

In 2005, Coetzee criticised contemporary anti-terrorism laws as resembling those employed by the apartheid regime in South Africa: "I used to think that the people who created [South Africa's] laws that effectively suspended the rule of law were moral barbarians. Now I know they were just pioneers ahead of their time". The main character in Coetzee's 2007 Diary of a Bad Year, which has been described as blending "memoir with fiction, academic criticism with novelistic narration" and refusing "to recognize the border that has traditionally separated political theory from fictional narrative", shares similar concerns about the policies of John Howard and George W. Bush.

On 6 March 2006, Coetzee became an Australian citizen, and it has been argued that his "acquired 'Australianness' is deliberately adopted and stressed".

In recent years, Coetzee has become a vocal critic of animal cruelty and advocate for the animal rights movement. In a speech given on his behalf by Hugo Weaving in Sydney on 22 February 2007, Coetzee railed against the modern animal husbandry industry.

Summertime, named on the 2009 longlist, was an early favourite to win an unprecedented third Booker Prize for Coetzee. It subsequently made the shortlist, but lost out to bookmakers' favourite and eventual winner Wolf Hall by Hilary Mantel. Coetzee was also longlisted in 2003 for Elizabeth Costello and in 2005 for Slow Man.

Coetzee's younger brother, the Journalist David Coetzee, died in 2010.

The Schooldays of Jesus, a follow up to his 2013 novel The Childhood of Jesus was longlisted for the 2016 Booker Prize.

Coetzee wanted to be a candidate in the 2014 European Parliament election for the Dutch Party for the Animals. His candidature was however rejected by the Dutch election board, which argued that candidates had to prove legal residence in the European Union to be allowed.

For the period 2015-2018, Coetzee has been a Director of a seminar on the "Literatures of the South" at the Universidad Nacional de San Martín. This has involved Writers and literary figures from South Africa, Australia, and Argentina. The aim of the seminars, one observer has remarked, is "to develop comparative perspectives on the literatures of the three countries, to establish new intellectual networks, and to build a corpus of translated works from across the South through collaborative publishing ventures." At the same time he has been involved in a research project in Australia, Other Worlds: Forms of World Literature, for which he is leading a theme on "Everyday Pleasures" that also is focused on the literatures of the South.

In February 2016, Coetzee was one of 61 signatories to a letter to Australian prime minister Malcolm Turnbull and immigration minister Peter Dutton, condemning their government's policy of offshore detention of asylum seekers.

He is descended from early Dutch immigrants to South Africa in the 17th century, while his mother was a descendant of German and Polish immigrants.