James Edward Franco was born in Palo Alto, California on April 19, 1978. His mother, Betsy Lou (née Verne), is a Writer and occasional Actress, and his father, Douglas Eugene "Doug" Franco, ran a Silicon Valley Business. His father was of Portuguese (from Madeira) and Swedish ancestry, while his mother is Jewish, from a family of Russian Jewish descent. His maternal grandfather, Daniel, changed his surname from "Verovitz" to "Verne" some time after 1940. His paternal grandmother, Marjorie (née Peterson), is a published author of young adult books. His maternal grandmother, Mitzie (née Levine), owned the prominent Verne Art Gallery in Cleveland, Ohio, and was an active member in the National Council of Jewish Women.

Franco's family upbringing was "academic, liberal, and largely secular". He grew up in California with his two brothers, actors Tom and Dave. A "math whiz", Franco interned at Lockheed Martin. He was often encouraged by his father to get good grades and did well on his SATs. He graduated from Palo Alto High School in 1996, where he acted in plays. This led to him attending CSSSA in 1998 for theater studies. In his high school years, Franco was arrested for underage drinking, graffiti, and being a part of a group that stole designer fragrances from department stores and sold them to classmates. These arrests led to Franco briefly becoming a ward of the state. Facing the possibility of Juvenile hall, he was given a second chance by the judge. He recalled of his troubles with the law, "It was teen angst. I was uncomfortable in my own skin. I was shy. I changed my ways just in time to get good grades."

After meeting on the set of Whatever It Takes in 1999, Franco dated co-star Marla Sokoloff for five years. He was later in a relationship with Actress Ahna O'Reilly until 2011. He confirmed their separation in an interview for Playboy magazine's August 2011 issue, saying that his interest in education got between them. He received attention in April 2014 for trying to set a date with a 17-year-old girl from Scotland in New York (age of consent in New York is 17) via social media. The woman filmed the conversation they had and released it to the public. Franco acknowledged flirting with her.

He was subsequently cast as the title role in Director Mark Rydell's 2001 TV biographical film James Dean. To immerse himself in the role, Franco went from being a non-smoker to smoking two packs of cigarettes a day, bleached his dark brown hair blond, and learned to ride a motorcycle as well as play guitar and the bongos. To have a greater understanding of Dean, Franco spent hours with two of Dean's associates. Other research included reading books on Dean and studying his movies. While filming James Dean, the actor, to get into character, cut off communication with his family and friends, as well as his then-girlfriend. "It was a very lonely existence," he notes. "If I wasn't on a set, I was watching James Dean. That was my whole thinking. James Dean. James Dean." Despite already being a fan of Dean, Franco feared he might be typecast if he'd captured the actor too convincingly. Ken Tucker of Entertainment Weekly wrote: "Franco could have walked through the role and done a passable Dean, but instead gets under the skin of this insecure, rootless young man." He received a Golden Globe Award and nominations for an Emmy Award and a Screen Actors Guild Award (SAG).

He next starred in Sonny, a 2002 release in which he was directed by fellow actor Nicolas Cage, whose involvement had attracted Franco to the film. Set in 1980s New Orleans, Sonny follows the titular character (Franco) returning home after just being discharged from the Army. To prepare for his role, he met with sex workers or people who had previously been prostitutes. The movie was panned by critics, with the New York Post's Lou Lumenick calling it an "instant candidate for worst movie of the year". Franco was cast as a homeless drug addict in the drama City by the Sea (2002) after co-star Robert De Niro saw a snippet of his work in James Dean. He lived on the streets for several days to better understand the subject matter as well as talking to former or still-using drug addicts. He also co-starred with Neve Campbell in Robert Altman's ballet movie The Company (2003). The success of the first Spider-Man film led Franco to reprise the role in the 2004 sequel, Spider-Man 2. The movie was well received by critics, and it proved to be a big financial success, setting a new opening weekend box office record for North America. With revenue of $783 million worldwide, it became the second highest-grossing film in 2004. The following year he made and starred in the black comedy The Ape and the 2005 war film The Great Raid, in which he portrayed Robert Prince, a captain in the United States Army's elite Sixth Ranger Battalion. In 2006, Franco co-starred with Tyrese Gibson in Annapolis and played legendary hero Tristan in Tristan & Isolde, a period piece dramatization of the Tristan and Iseult story also starring British Actress Sophia Myles. For the former, he did eight months of boxing training and for the latter, he practiced horseback riding and sword fighting. He then completed training for his Private Pilot Licence in preparation for his role in Flyboys, which was released in September 2006; the same month, Franco appeared briefly in The Wicker Man, the remake of the seminal horror film. Also in 2006, he made a cameo appearance in the romantic comedy The Holiday.

Franco developed an aptitude for art—painting in particular—during his high school years while attending the California State Summer School for the Arts (CSSSA). Franco has said painting was the "outlet" he needed in high school, and he "has actually been painting longer than he has been acting". His paintings were displayed publicly for the first time at the Glü Gallery in Los Angeles, from January 7, through February 11, 2006. He launched his first European art exhibition in 2011 at Peres Projects in Berlin. He enjoys reading on the set of his films. Pineapple Express Producer Judd Apatow has said of him: "He's a very education-minded person. We used to laugh because in between takes he'd be reading The Iliad on set. We still haven't read The Iliad. It was a very difficult book. With him, it was always James Joyce or something".

He again played Harry Osborn in Spider-Man 3 (2007). In contrast to the previous two films' positive reviews, Spider-Man 3 was met with a mixed reception by critics. Nonetheless, with a total worldwide gross of $891 million, it stands as the most successful film in the series, and Franco's highest-grossing film to date. In this same year, Franco made a cameo appearance as himself in the Apatow-directed comedy Knocked Up, which starred Freaks and Geeks alumni Seth Rogen, Jason Segel and Martin Starr. Franco co-starred with Sienna Miller in the low-budget independent film Camille, a dark fantasy dramedy about a young newlywed couple and Interview, where he appears in a voice only role, both 2007 movies that were ignored by audiences and critics alike. Among his other 2007 projects were Good Time Max, which Franco wrote, directed and starred in. The movie premiered at the 2007 Tribeca Film Festival and tells the story of two talented brothers who take very diverse paths in life, one going on to become a Doctor whilst the other sibling (Franco) experiences unemployment and uses drugs. The actor chose to cast himself in that role because, "It was really just a process of elimination. I was better suited for this role than the responsible surgeon".

In 2008, Franco was named as the face of Gucci's men's fragrance line. His short films as Director The Feast of Stephen and Herbert White were both presented within Maryland Film Festival in May 2010. Another of his short movies, The Clerk's Tale, was screened in competition at the Hamptons Film Festival at the end of 2010. In June 2010, James Franco presented his first solo exhibition, "The Dangerous Book Four Boys", presented at The Clocktower Gallery in New York City. Curated by Alanna Heiss, the show featured video, drawings, sculptures and installation.

He was selected as the commencement speaker at his alma mater, UCLA, and was to speak at the ceremony on June 12, 2009. Several months before commencement, an editorial in the student newspaper questioned his "caliber" and a student created a Facebook page protesting the choice. On June 3, Franco withdrew, citing a date conflict with location pre-production on a film. On January 26, 2011, Franco and the Harvard Lampoon released a satirical video on prominent comedy website Funny or Die mocking his last-minute cancellation.

In an interview with Showbiz411, on September 23, 2010, Franco made the erroneous public announcement that he received a "D" grade in "Acting" class at the NYU Graduate Film School. It was in fact a "Directing the Actor" class. Franco admitted to missing most of his classes that semester. A professor at New York University, José Angel Santana, alleged that Franco did not earn his grades while attending that school, stating that Franco missed over 80% of his classes and only received high marks and a degree because of his Celebrity status as an actor. In September 2012, Santana filed a lawsuit against Franco for defamation seeking unspecified damages. In September 2013, James Franco and Santana settled the defamation lawsuit. "The matter has been resolved to the mutual satisfaction of the parties”, said Santana's attorney Matthew Blit.

On March 31, 2011, the actor took part in "An Evening with James Franco", a Washington D.C. dinner benefit for 826DC, a non-profit foundation created to help neighborhood students reach their goals, as well as provide after-school literature programs and workshops that encourage them to improve their writing skills. Franco became involved with Dave Eggers' 826 National after Eggers asked him to do a conceptual idea for the program, and he directed a documentary for them and has since been a supporter of them. At the event, he spoke about how he thought schools needed to be more original with their literature programs. "Writing can do things that video cannot", he added. In April 2011, Franco autographed a T-shirt that would be auctioned off through the Yoshiki Foundation, with the proceeds being donated for Japanese tsunami relief. On June 14, he was honored by amfAR, the foundation for AIDS research, at the Museum of Modern Art. Franco received the Piaget Award of Inspiration for his humanitarian work and contributions to men's style.

In April 2012, Shalom Life ranked Franco and his brother, Dave, together as number two on its list of 50 talented and attractive Jewish men. In 2013, Franco was featured as the cover model and featured focus in the men's magazine Man of the World.

In April 2013, Franco received the Ally Award at the 15th annual Miami Gay & Lesbian Film Festival. The award was presented to him in recognition of his unwavering support of the LGBT community.

In April 2014, Franco presented at Broadway Cares/Equity Fights AIDS Easter Bonnet Competition with Leighton Meester and Chris O'Dowd, after raising donations at his Broadway show Of Mice and Men. In June 2014, Franco performed in the BC/EFA benefit Broadway Bares

Due to his support for the LGBT community, and his portrayal of gay characters in his projects, Franco's sexuality has been a subject of discussion in media sources, relentlessly questioning if he himself is gay. In response to questions regarding his sexuality, he insists he finds plenty more dimensions to the characters than their bedroom proclivities. "Or, you know what," he quipped, "maybe I'm just gay." In a March 2015 interview with Four Two Nine magazine, Franco again opened up about his sexuality, commenting that it is not who you have sex with that defines your sexuality, but instead how you act. "In the twenties and thirties, they used to define homosexuality by how you acted and not by whom you slept with. Sailors would fuck guys all the time, but as long as they behaved in masculine ways, they weren't considered gay." He added, "Well, I like to think that I'm gay in my art and straight in my life."

In 2015, Franco was cast in the lead role for the Hulu limited series 11.22.63 which is based on the novel of the same name by Stephen King. The eight-episode series premiered on February 15, 2016. In 2016, Franco co-produced and starred in King Cobra, a true story about the rise of gay pornographic actor Brent Corrigan and the murder of Bryan Kocis. Franco played Joseph Kerekes who (along with his partner) was convicted of the murder. In the comedy Why Him?, released in December 2016, Franco played an immature tech-billionaire whose girlfriend's conservative father tries to intervene in the couple's relationship, with Zoey Deutch playing the girlfriend and Bryan Cranston as her father.. He briefly appeared in the Alien prequel, Alien: Covenant, alongside friend and frequent collaborator Danny McBride, and Michael Fassbender and Noomi Rapace. He played Branson, the captain of the Covenant ship and husband to Daniels, played by Katherine Waterston. The film was released on May 19, 2017.

At the end of 2017, Franco, almost 40, said he was slowing down to focus on himself. He was having something of a moment, with two Golden Globe nominations and some Oscar buzz, to which he has said he brought a new perspective: "Hard work does pay off, but what I didn't realize is you need balance, and you cannot make your happiness contingent on your work, or anything outside of you for that matter, right? It's gotta be, at the risk of sounding cheesy, a more spiritual thing. I didn't learn that until a year ago."

At the 2018 Golden Globes, Franco wore a Time's Up pin in solidarity with the #MeToo movement, to protest harassment against women. Franco's pin drew criticism on social media from Actress Ally Sheedy, who hinted she had quit acting after working with Franco in a play. A former girlfriend, Violet Paley, also alleged that Franco once forced her to give him oral sex in a car while they were dating. On January 9, 2018, The New York Times canceled a planned event with James Franco, citing the allegations. On January 10, Franco said on The Late Show with Stephen Colbert that the accusations were "not accurate." On January 11, the Los Angeles Times reported that five additional women were accusing James Franco of inappropriate or sexually exploitative behavior. Franco's attorney, Michael Plonsker, disputed these women's allegations.