Tolkien's paternal ancestors were middle-class craftsmen who made and sold clocks, watches and pianos in London and Birmingham. The Tolkien family had emigrated from Germany in the 18th century but had become "quickly intensely English". According to the family tradition, the Tolkiens had arrived in England in 1756, as refugees from Frederick the Great's invasion of the Electorate of Saxony during the Seven Years' War. Several families with the surname Tolkien or similar spelling live in northwestern Germany, mainly in Lower Saxony and Hamburg.

John Ronald Reuel Tolkien was born on 3 January 1892 in Bloemfontein in the Orange Free State (now Free State Province in South Africa) to Arthur Reuel Tolkien (1857–1896), an English bank manager, and his wife Mabel, née Suffield (1870–1904). The couple had left England when Arthur was promoted to head the Bloemfontein office of the British bank for which he worked. Tolkien had one sibling, his younger brother, Hilary Arthur Reuel Tolkien, who was born on 17 February 1894.

When he was three, he went to England with his mother and brother on what was intended to be a lengthy family visit. His father, however, died in South Africa of rheumatic fever before he could join them. This left the family without an income, so Tolkien's mother took him to live with her parents in Kings Heath, Birmingham. Soon after, in 1896, they moved to Sarehole (now in Hall Green), then a Worcestershire village, later annexed to Birmingham. He enjoyed exploring Sarehole Mill and Moseley Bog and the Clent, Lickey and Malvern Hills, which would later inspire scenes in his books, along with nearby towns and villages such as Bromsgrove, Alcester, and Alvechurch and places such as his aunt Jane's farm of Bag End, the name of which he used in his fiction.

Mabel Tolkien was received into the Roman Catholic Church in 1900 despite vehement protests by her Baptist family, which stopped all financial assistance to her. In 1904, when J.R.R. Tolkien was 12, his mother died of acute diabetes at Fern Cottage in Rednal, which she was renting. She was then about 34 years of age, about as old as a person with diabetes mellitus type 1 could live without treatment—insulin would not be discovered until two decades later. Nine years after her death, Tolkien wrote, "My own dear mother was a martyr indeed, and it is not to everybody that God grants so easy a way to his great gifts as he did to Hilary and myself, giving us a mother who killed herself with labour and trouble to ensure us keeping the faith."

After his mother's death, Tolkien grew up in the Edgbaston area of Birmingham and attended King Edward's School, Birmingham, and later St. Philip's School. In 1903, he won a Foundation Scholarship and returned to King Edward's. While a pupil there, Tolkien was one of the cadets from the school's Officers Training Corps who helped "line the route" for the 1910 coronation parade of King George V. Like the other cadets from King Edward's, Tolkien was posted just outside the gates of Buckingham Palace.

Tolkien learned Esperanto some time before 1909. Around 10 June 1909 he composed "The Book of the Foxrook", a sixteen-page notebook, where the "earliest Example of one of his invented alphabets" appears. Short texts in this notebook are written in Esperanto.

In 1911, Tolkien went on a summer holiday in Switzerland, a trip that he recollects vividly in a 1968 letter, noting that Bilbo's journey across the Misty Mountains ("including the glissade down the slithering stones into the pine woods") is directly based on his adventures as their party of 12 hiked from Interlaken to Lauterbrunnen and on to camp in the moraines beyond Mürren. Fifty-seven years later, Tolkien remembered his regret at leaving the view of the eternal snows of Jungfrau and Silberhorn, "the Silvertine (Celebdil) of my dreams". They went across the Kleine Scheidegg to Grindelwald and on across the Grosse Scheidegg to Meiringen. They continued across the Grimsel Pass, through the upper Valais to Brig and on to the Aletsch glacier and Zermatt.

On 8 January 1913, Tolkien travelled by train to Cheltenham and was met on the platform by Edith. The two took a walk into the countryside, sat under a railway viaduct, and talked. By the end of the day, Edith had agreed to accept Tolkien's proposal. She wrote to Field and returned her engagement ring. Field was "dreadfully upset at first", and the Field family was "insulted and angry". Upon learning of Edith's new plans, Jessop wrote to her guardian, "I have nothing to say against Tolkien, he is a cultured gentleman, but his prospects are poor in the extreme, and when he will be in a position to marry I cannot imagine. Had he adopted a profession it would have been different."

In August 1914 the United Kingdom entered the First World War. Tolkien's relatives were shocked when he elected not to immediately volunteer for the British Army. In a 1941 letter to his son Michael, Tolkien recalled, "In those days chaps joined up, or were scorned publicly. It was a nasty cleft to be in for a young man with too much imagination and little physical courage."

Both Tolkien's academic career and his literary production are inseparable from his love of language and philology. He specialized in English philology at university and in 1915 graduated with Old Norse as special subject. He worked for the Oxford English Dictionary from 1918 and is credited with having worked on a number of words starting with the letter W, including walrus, over which he struggled mightily. In 1920, he became Reader in English Language at the University of Leeds, where he claimed credit for raising the number of students of linguistics from five to twenty. He gave courses in Old English heroic verse, history of English, various Old English and Middle English texts, Old and Middle English philology, introductory Germanic philology, Gothic, Old Icelandic, and Medieval Welsh. When in 1925, aged thirty-three, Tolkien applied for the Rawlinson and Bosworth Professorship of Anglo-Saxon at Pembroke College, Oxford, he boasted that his students of Germanic philology in Leeds had even formed a "Viking Club". He also had a certain, if imperfect, knowledge of Finnish.

On 27 October 1916, as his battalion attacked Regina Trench, Tolkien came down with trench fever, a disease carried by the lice. He was invalided to England on 8 November 1916. Many of his dearest school friends were killed in the war. Among their number were Rob Gilson of the Tea Club and Barrovian Society, who was killed on the first day of the Somme while leading his men in the assault on Beaumont Hamel. Fellow T.C.B.S. member Geoffrey Smith was killed during the same battle when a German artillery shell landed on a first aid post. Tolkien's battalion was almost completely wiped out following his return to England.

The Tolkiens had four children: John Francis Reuel Tolkien (17 November 1917 – 22 January 2003), Michael Hilary Reuel Tolkien (22 October 1920 – 27 February 1984), Christopher John Reuel Tolkien (born 21 November 1924) and Priscilla Mary Anne Reuel Tolkien (born 18 June 1929). Tolkien was very devoted to his children and sent them illustrated letters from Father Christmas when they were young. Each year more characters were added, such as the North Polar Bear (Father Christmas's helper), the Snow Man (his gardener), Ilbereth the elf (his secretary), and various other, minor characters. The major characters would relate tales of Father Christmas's battles against goblins who rode on bats and the various pranks committed by the North Polar Bear.

Tolkien was promoted to the temporary rank of lieutenant on 6 January 1918. When he was stationed at Kingston upon Hull, he and Edith went walking in the woods at nearby Roos, and Edith began to dance for him in a clearing among the flowering hemlock. After his wife's death in 1971, Tolkien remembered,

In mid-1919 he began to privately tutor undergraduates, most importantly those of Lady Margaret Hall and St Hugh's College given that the women's colleges were in great need of good teachers in their early years.

In the 1920s, Tolkien undertook a translation of Beowulf, which he finished in 1926. He never published it. It was finally edited by his son and published in 2014, more than forty years after Tolkien's death and almost 90 years since its completion.

On the evening of his 21st birthday, Tolkien wrote to Edith, who was living with family friend C. H. Jessop at Cheltenham. He declared that he had never ceased to love her and asked her to marry him. Edith replied that she had already accepted the proposal of George Field, the brother of one of her closest schoolfriends. Edith said, however, that she had agreed to marry Field only because she felt "on the shelf" and had begun to doubt that Tolkien still cared for her. She explained that, because of Tolkien's letter, everything had changed.

Tolkien considered languages inseparable from the mythology associated with them, and he consequently took a dim view of auxiliary languages: in 1930 a congress of Esperantists were told as much by him, in his lecture A Secret Vice, "Your language construction will breed a mythology", but by 1956 he had concluded that "Volapük, Esperanto, Ido, Novial, &c, &c, are dead, far deader than ancient unused languages, because their authors never invented any Esperanto legends".

Tolkien never expected his stories to become popular, but by sheer accident a book called The Hobbit, which he had written some years before for his own children, came in 1936 to the attention of Susan Dagnall, an employee of the London publishing firm George Allen & Unwin, who persuaded Tolkien to submit it for publication. When it was published a year later, the book attracted adult readers as well as children, and it became popular enough for the publishers to ask Tolkien to produce a sequel.

Unlike other authors of the genre, Tolkien never favoured signing his works. Owing to his popularity, handsigned copies of his letters or of the first editions of his individual writings have however achieved high values at auctions, and forged autographs may occur on the market. In particular, the signed first hardback edition of The Hobbit from 1937 has reportedly been offered for $85,000. Collectibles also include non-fiction books with hand-written annotations from Tolkien's private library.

Tolkien vocally opposed Adolf Hitler and the Nazi Party prior to the Second World War, and was known to especially despise Nazi racist and anti-Semitic ideology. In 1938, the publishing house Rütten & Loening Verlag was preparing to release The Hobbit in Nazi Germany. To Tolkien's outrage, he was asked beforehand whether he was of Aryan origin. In a letter to his British publisher Stanley Unwin, he condemned Nazi "race-doctrine" as "wholly pernicious and unscientific". He added that he had many Jewish friends and was considering "letting a German translation go hang". He provided two letters to Rütten & Loening and instructed Unwin to send whichever he preferred. The more tactful letter was sent and was lost during the later bombing of Germany. In the unsent letter, Tolkien makes the point that "Aryan" is a linguistic term, denoting speakers of Indo-Iranian languages. He continued,

He had dismissed dramatic representations of fantasy in his essay "On Fairy-Stories", first presented in 1939:

In a 1941 letter to his son Michael, he expressed his resentment at the distortion of Germanic history in "Nordicism":

Tolkien was a devout Roman Catholic, and in his religious and political views he was mostly a traditionalist moderate, with libertarian, distributist, and monarchist leanings, in the sense of favouring established conventions and orthodoxies over innovation and modernization, whilst castigating government bureaucracy; in 1943 he wrote, "My political opinions lean more and more to Anarchy (philosophically understood, meaning abolition of control not whiskered men with bombs)—or to 'unconstitutional' Monarchy."

He also reacted with anger at the excesses of anti-German propaganda during the war. In 1944, he wrote in a letter to his son Christopher:

Parallel to Tolkien's professional work as a philologist, and sometimes overshadowing this work, to the effect that his academic output remained rather thin, was his affection for constructing languages. The most developed of these are Quenya and Sindarin, the etymological connection between which formed the core of much of Tolkien's legendarium. Language and grammar for Tolkien was a matter of aesthetics and euphony, and Quenya in particular was designed from "phonaesthetic" considerations; it was intended as an "Elvenlatin", and was phonologically based on Latin, with ingredients from Finnish, Welsh, English, and Greek. A notable addition came in late 1945 with Adûnaic or Númenórean, a language of a "faintly Semitic flavour", connected with Tolkien's Atlantis legend, which by The Notion Club Papers ties directly into his ideas about the inability of language to be inherited, and via the "Second Age" and the story of Eärendil was grounded in the legendarium, thereby providing a link of Tolkien's 20th-century "real primary world" with the legendary past of his Middle-earth.

However, Tolkien was not fond of all the artistic representation of his works that were produced in his lifetime, and was sometimes harshly disapproving. In 1946, he rejected suggestions for illustrations by Horus Engels for the German edition of The Hobbit as "too Disnified ... Bilbo with a dribbling nose, and Gandalf as a figure of vulgar fun rather than the Odinic wanderer that I think of".

Tolkien wrote a brief "Sketch of the Mythology", which included the tales of Beren and Lúthien and of Túrin; and that Sketch eventually evolved into the Quenta Silmarillion, an epic history that Tolkien started three times but never published. Tolkien desperately hoped to publish it along with The Lord of the Rings, but publishers (both Allen & Unwin and Collins) declined. Moreover, printing costs were very high in 1950s Britain, requiring The Lord of the Rings to be published in three volumes. The story of this continuous redrafting is told in the posthumous series The History of Middle-earth, edited by Tolkien's son, Christopher Tolkien. From around 1936, Tolkien began to extend this framework to include the tale of The Fall of Númenor, which was inspired by the legend of Atlantis.

In a 1951 letter to Milton Waldman, Tolkien wrote about his intentions to create a "body of more or less connected legend", of which "[t]he cycles should be linked to a majestic whole, and yet leave scope for other minds and hands, wielding paint and music and drama". The hands and minds of many artists have indeed been inspired by Tolkien's legends. Personally known to him were Pauline Baynes (Tolkien's favourite Illustrator of The Adventures of Tom Bombadil and Farmer Giles of Ham) and Donald Swann (who set the music to The Road Goes Ever On). Queen Margrethe II of Denmark created illustrations to The Lord of the Rings in the early 1970s. She sent them to Tolkien, who was struck by the similarity they bore in style to his own drawings.

Tolkien was sceptical of the emerging Tolkien fandom in the United States, and in 1954 he returned proposals for the dust jackets of the American edition of The Lord of the Rings:

Privately, Tolkien was attracted to "things of racial and linguistic significance", and in his 1955 lecture English and Welsh, which is crucial to his understanding of race and language, he entertained notions of "inherent linguistic predilections", which he termed the "native language" as opposed to the "cradle-tongue" which a person first learns to speak. He considered the West Midlands dialect of Middle English to be his own "native language", and, as he wrote to W. H. Auden in 1955, "I am a West-midlander by blood (and took to early west-midland Middle English as a known tongue as soon as I set eyes on it)."

During his life in retirement, from 1959 up to his death in 1973, Tolkien received steadily increasing public attention and literary fame. In 1961, his friend C. S. Lewis even nominated him for the Nobel Prize in Literature. The sales of his books were so profitable that he regretted that he had not chosen early retirement. At first, he wrote enthusiastic answers to readers' enquiries, but he became increasingly unhappy about the sudden popularity of his books with the 1960s counter-culture movement. In a 1972 letter, he deplored having become a cult-figure, but admitted that "even the nose of a very modest idol ... cannot remain entirely untickled by the sweet smell of incense!"

The Lord of the Rings became immensely popular in the 1960s and has remained so ever since, ranking as one of the most popular works of fiction of the 20th century, judged by both sales and reader surveys. In the 2003 "Big Read" survey conducted by the BBC, The Lord of the Rings was found to be the UK's "Best-loved Novel". Australians voted The Lord of the Rings "My Favourite Book" in a 2004 survey conducted by the Australian ABC. In a 1999 poll of Amazon.com customers, The Lord of the Rings was judged to be their favourite "book of the millennium". In 2002 Tolkien was voted the 92nd "greatest Briton" in a poll conducted by the BBC, and in 2004 he was voted 35th in the SABC3's Great South Africans, the only person to appear in both lists. His popularity is not limited to the English-speaking world: in a 2004 poll inspired by the UK's "Big Read" survey, about 250,000 Germans found The Lord of the Rings to be their favourite work of literature.

Tolkien was contemptuous of Joseph Stalin. During World War II, Tolkien referred to Stalin as "that bloodthirsty old murderer". However, in 1961, Tolkien sharply criticized a Swedish commentator who suggested that The Lord of the Rings was an anti-communist parable and identified Sauron with Stalin. Tolkien said, "I utterly repudiate any such reading, which angers me. The situation was conceived long before the Russian revolution. Such allegory is entirely foreign to my thought."

Prior to her death, Mabel Tolkien had assigned the guardianship of her sons to her close friend, Fr. Francis Xavier Morgan of the Birmingham Oratory, who was assigned to bring them up as good Catholics. In a 1965 letter to his son Michael, Tolkien recalled the influence of the man whom he always called "Father Francis": "He was an upper-class Welsh-Spaniard Tory, and seemed to some just a pottering old gossip. He was—and he was not. I first learned charity and forgiveness from him; and in the light of it pierced even the 'liberal' darkness out of which I came, knowing more [i.e. Tolkien having grown up knowing more] about 'Bloody Mary' than the Mother of Jesus—who was never mentioned except as an object of wicked worship by the Romanists."

Tolkien also translated the Book of Jonah for the Jerusalem Bible, which was published in 1966.

Tolkien went on to criticize the script scene by scene ("yet one more scene of screams and rather meaningless slashings"). He was not implacably opposed to the idea of a dramatic adaptation, however, and sold the film, stage and merchandise rights of The Hobbit and The Lord of the Rings to United Artists in 1968. United Artists never made a film, although Director John Boorman was planning a live-action film in the early 1970s. In 1976, the rights were sold to Tolkien Enterprises, a division of the Saul Zaentz Company, and the first film adaptation of The Lord of the Rings was released in 1978 as an animated rotoscoping film directed by Ralph Bakshi with screenplay by the fantasy Writer Peter S. Beagle. It covered only the first half of the story of The Lord of the Rings. In 1977, an animated musical television film of The Hobbit was made by Rankin-Bass, and in 1980, they produced the animated musical television film The Return of the King, which covered some of the portions of The Lord of the Rings that Bakshi was unable to complete.

Edith Tolkien died on 29 November 1971, at the age of 82. According to Simon Tolkien:

Tolkien was appointed by Queen Elizabeth II a Commander of the Order of the British Empire in the 1972 New Year Honours and received the insignia of the Order at Buckingham Palace on 28 March 1972. In the same year Oxford University conferred upon him an honorary Doctorate of Letters.

Tolkien had the name Lúthien engraved on Edith's tombstone at Wolvercote Cemetery, Oxford. When Tolkien died 21 months later on 2 September 1973 from a bleeding ulcer and chest infection, at the age of 81, he was buried in the same grave, with Beren added to his name. The engravings read:

Tolkien had appointed his son Christopher to be his literary executor, and he (with assistance from Guy Gavriel Kay, later a well-known fantasy author in his own right) organized some of this material into a single coherent volume, published as The Silmarillion in 1977. It received the Locus Award for Best Fantasy novel in 1978.

In 1980 Christopher Tolkien published a collection of more fragmentary material, under the title Unfinished Tales of Númenor and Middle-earth. In subsequent years (1983–1996) he published a large amount of the remaining unpublished materials, together with notes and extensive commentary, in a series of twelve volumes called The History of Middle-earth. They contain unfinished, abandoned, alternative, and outright contradictory accounts, since they were always a work in progress for Tolkien and he only rarely settled on a definitive version for any of the stories. There is not complete consistency between The Lord of the Rings and The Hobbit, the two most closely related works, because Tolkien never fully integrated all their traditions into each other. He commented in 1965, while editing The Hobbit for a third edition, that he would have preferred to completely rewrite the book because of the style of its prose.

One of Tolkien's least-known short works is the children's storybook Mr. Bliss, published in 1982. It tells the story of Mr. Bliss and his first ride in his new motor-car. Many adventures follow: encounters with bears, angry neighbours, irate shopkeepers, and assorted collisions. The story was inspired by Tolkien's own vehicular mishaps with his first car, purchased in 1932. The bears were based on toy bears owned by Tolkien's sons. Tolkien was both author and Illustrator of the book. He submitted it to his publishers as a balm to readers who were hungry for more from him after the success of The Hobbit. The lavish ink and coloured-pencil illustrations would have made production costs prohibitively expensive. Tolkien agreed to redraw the pictures in a simpler style, but then found he did not have time to do so. The book was published in 1982 as a facsimile of Tolkien's difficult-to-read illustrated manuscript, with a typeset transcription on each facing page.

He was an accomplished Artist, who learned to paint and draw as a child and continued to do so all his life. His artwork was collected and published in 1995 as a book: J.R.R. Tolkien : Artist & Illustrator. The book discusses the paintings, drawings, and sketches of J.R.R. Tolkien, in total includes 200 reproductions of his art.

From 2001 to 2003, New Line Cinema released The Lord of the Rings as a trilogy of live-action films that were filmed in New Zealand and directed by Peter Jackson. The series was successful, performing extremely well commercially and winning numerous Oscars.

During his time at Pembroke College Tolkien wrote The Hobbit and the first two volumes of The Lord of the Rings, whilst living at 20 Northmoor Road in North Oxford (where a blue plaque was placed in 2002). He also published a philological essay in 1932 on the name "Nodens", following Sir Mortimer Wheeler's unearthing of a Roman Asclepeion at Lydney Park, Gloucestershire, in 1928.

Since 2003 The Tolkien Society has organized Tolkien Reading Day, which takes place on 25 March in schools around the world.

In the field of taxonomy, over 80 taxa (genera and species) have been given scientific names honouring, or deriving from, characters or other fictional elements from The Lord of the Rings, The Hobbit, and other works set in Middle-earth. Several taxa have been named after the character Gollum (also known as Sméagol), as well as for various hobbits, the small humanlike creatures such as Bilbo and Frodo Baggins. Various elves, dwarves, and other creatures that appear in his writings as well as Tolkien himself have been honoured in the names of several species, including the amphipod Leucothoe tolkieni, and the wasp Shireplitis tolkieni. In 2004, the extinct hominid Homo floresiensis was described, and quickly earned the nickname "hobbit" due to its small size. In 1978, Paleontologist Leigh Van Valen named over 20 taxa of extinct mammals after Tolkien lore in a single paper. In 1999, entomologist Lauri Kaila described 48 new species of Elachista moths and named 37 of them after Tolkien mythology. It has been noted that "Tolkien has been accorded formal taxonomic commemoration like no other author."

More recently, in 2007, The Children of Húrin was published by HarperCollins (in the UK and Canada) and Houghton Mifflin (in the US). The novel tells the story of Túrin Turambar and his sister Nienor, children of Húrin Thalion. The material was compiled by Christopher Tolkien from The Silmarillion, Unfinished Tales, The History of Middle-earth, and unpublished manuscripts.

In 2009, a partial draft of Language and Human Nature, which Tolkien had begun co-writing with C. S. Lewis but had never completed, was discovered at the Bodleian Library.

The Story of Kullervo, first published in Tolkien Studies in 2010 and reissued with additional material in 2015, is a retelling of a 19th-century Finnish poem. It was written in 1915 while Tolkien was studying at Oxford.

In 2012, Tolkien was among the British cultural icons selected by Artist Sir Peter Blake to appear in a new version of his most famous artwork – the Beatles' Sgt. Pepper's Lonely Hearts Club Band album cover – to celebrate the British cultural figures of his life that he most admires.

The Fall of Arthur, published on 23 May 2013, is a long narrative poem composed by Tolkien in the early-1930s. It is alliterative, extending to almost 1,000 lines imitating the Old English Beowulf metre in Modern English. Though inspired by high medieval Arthurian fiction, the historical setting of the poem is during the Post-Roman Migration Period, both in form (using Germanic verse) and in content, showing Arthur as a British warlord fighting the Saxon invasion, while it avoids the high medieval aspects of the Arthurian cycle (such as the Grail, and the courtly setting); the poem begins with a British "counter-invasion" to the Saxon lands (Arthur eastward in arms purposed).

The "Tolkien Road" in Eastbourne, East Sussex, was named after Tolkien whereas the "Tolkien Way" in Stoke-on-Trent is named after Tolkien's eldest son, Fr. John Francis Tolkien, who was the priest in charge at the nearby Roman Catholic Church of Our Lady of the Angels and St. Peter in Chains. In the Hall Green and Moseley areas of Birmingham there are a number of parks and walkways dedicated to J. R. R. Tolkien—most notably, the Millstream Way and Moseley Bog. Collectively the parks are known as the Shire Country Parks. Also in Weston-super-Mare, Somerset, England there are a collection of roads in the 'Weston Village' named after locales of Middle Earth, namely Hobbiton Road, Bree Close, Arnor Close, Rivendell, Westmarch Way and Buckland Green.

On 13 November 2017, it was announced that Amazon had acquired the global television rights to The Lord of the Rings. The series will not be a direct adaptation of the books, but will instead introduce new stories that are set before The Fellowship of the Ring. The press release referred to "previously unexplored stories based on J. R. R. Tolkien's original writings". Amazon will be the Producer in conjunction with the Tolkien Estate and the Tolkien Trust, HarperCollins and New Line Cinema.

The Fall of Gondolin is a tale of a beautiful, mysterious city destroyed by dark forces, that called "the first real story" of Middle-earth, will be published in August 2018 as a standalone book, edited by Christopher Tolkien and illustrated by Alan Lee.

The popularity of Tolkien's books has had a small but lasting effect on the use of language in fantasy literature in particular, and even on mainstream dictionaries, which today commonly accept Tolkien's idiosyncratic spellings dwarves and dwarvish (alongside dwarfs and dwarfish), which had been little used since the mid-19th century and earlier. (In fact, according to Tolkien, had the Old English plural survived, it would have been dwarrows or dwerrows.) He also coined the term eucatastrophe, though it remains mainly used in connection with his own work.