Born in Burnbank, South Lanarkshire, Stein saw football as his escape from the Lanarkshire coal mines. In 1937 he left Greenfield school in Hamilton and after a short time working in a carpet factory went down the pits to become a miner. In 1940, Stein agreed to sign for Burnbank Athletic, but his Father vehemently objected. Soon afterwards, he instead joined Blantyre Victoria, another local junior club.

Stein first played for senior club Albion Rovers as a trialist in a 4–4 draw against Celtic on 14 November 1942. Three weeks later, manager Webber Lees signed Stein for the Coatbridge club. He continued to work as a miner during the week, which was a reserved occupation during the Second World War. This allowed Stein to play regularly, as many of their other players were serving in the Armed Forces. He had a brief loan spell with Dundee United in 1943. Rovers won promotion to the First Division in 1947–48, for only the fourth time in the club's history. During the 1948–49 season, Rovers conceded 105 goals, won only three league games out of 30 and were relegated back to the Second Division.

In 1950, Stein signed for non-league Welsh club Llanelli. For the first time in his career, he became a full-time professional footballer, earning £12 per week. Llanelli had gained promotion to the Southern League in 1950 and signed several Scottish professionals. In 1951, the club's application to join the Football League was rejected and there were rumours of financial problems. All but two of the Scottish professionals left.

In December 1951, on the recommendation of reserve team trainer Jimmy Gribben, Celtic bought him for £1,200. He was signed as a reserve but injuries incurred by first team players resulted in him being elevated to the first team. In 1952 he was appointed vice-captain; when captain Sean Fallon suffered a broken arm, the captaincy was passed to Stein.

Celtic finished eighth in the Scottish League during 1952–53 and were only invited to the pan-British Coronation Cup tournament due to their large support base. Celtic beat Arsenal, Manchester United and Hibernian to win the trophy. This success was built upon in 1953–54, as Stein captained the side that won a League and Scottish Cup double. It was their first League championship since 1938 and first League and Scottish Cup double since 1914. As a reward for their achievement, the club paid for all of the players to attend the 1954 FIFA World Cup in Switzerland. Celtic had also sent their players to watch the England v Hungary match in 1953. Stein was influenced by Scotland's poor preparation and the impressive performance of Hungary. Stein received his only international recognition in 1954, when he was selected for the Scottish Football League XI. It was not a happy experience for Stein, as his direct opponent, Bedford Jezzard, scored two goals as The Football League XI won 4–0 at Stamford Bridge.

In July 1957, Stein was given the job of coaching the Celtic reserve team. His squad included a number of young players who would later play under him in the first team, including Billy McNeill, Bobby Murdoch and John Clark. In his first season as a coach, Stein won the Reserve Cup with an 8–2 aggregate triumph over Rangers. Despite this success, according to football Journalist Archie MacPherson, Stein felt he could not progress further at Celtic due to his Protestant faith; Celtic had only previously appointed Catholics as manager, though one of these, Willie Maley had spent 50 years at the club and Stein was only the fourth person to be appointed Celtic manager, after Maley, Jimmy McStay and Jimmy McGrory, who was manager for 20 years. It was later suggested that Stein was allowed to leave Celtic temporarily with the intention of later appointing him manager, but MacPherson found no evidence for this.

On 14 March 1960, Stein was appointed manager of Dunfermline. When Stein was appointed, the team were only two points above last place and mired in a battle against relegation. The team had not won in four months, but then won their first six matches managed by Stein. To build upon this initial success, Stein signed Willie Cunningham and Tommy McDonald from Leicester City. Dunfermline became a powerful force and Stein guided them to their first Scottish Cup victory in 1961, winning 2–0 in a replayed Final against Celtic. This success prompted job offers from Newcastle United and Hibernian, both of which were rejected by Stein.

In the 1961–62 season, Dunfermline progressed to the quarter-final of the 1961–62 European Cup Winners' Cup and finished in fourth place in the league. Their league position earned a place in the Fairs Cup after a Greek club withdrew. Dunfermline defeated Everton in the 1962–63 Fairs Cup and retrieved a four-goal deficit against Valencia, but then lost in a play-off game. Towards the end of the 1963–64 season, it became apparent that Hibs wanted to replace their manager, Walter Galbraith. It was reported in the media on 27 February that Stein would leave Dunfermline at the end of the season. A fortnight later, amidst speculation that Stein would move to Hibernian, Galbraith left the Edinburgh club. On 28 March, Dunfermline lost in a Scottish Cup semi-final against Rangers. It was announced two days later that Stein would leave Dunfermline with immediate effect, allowing him to take charge at Hibernian.

It was announced on 31 January that Stein would leave Hibs for Celtic at the end of the 1964–65 season. Stein left Hibs in early March, after he had arranged for Dundee manager Bob Shankly to take the Hibs job. When Stein left, Hibs were near the top of the league and in the semi-finals of the 1964–65 Scottish Cup. Hibs had defeated Rangers in the quarter-final, in his last game as Hibs manager. They failed to win either competition, however, and Stein later admitted that "leaving Hibs at that time was probably my most embarrassing experience in football". Stein was statistically the best ever manager of Hibs, with a win rate of 62%.

Stein was first appointed manager of Scotland on a part-time basis in the spring of 1965, taking charge of their attempt to qualify for the 1966 World Cup. Scotland achieved good results in their first two qualifiers, a draw against Poland and a win against Finland. Stein was criticised by the Scottish press after the team conceded two late goals and lost 2–1 at home to Poland, but they managed to beat Italy 1–0 at Hampden Park through a last minute goal by John Greig to raise some hope of qualification. Scotland suffered from several players withdrawing from the return match against Italy due to injury. Stein, by instinct an attacking coach, set his team up defensively. A 3–0 defeat meant that they failed to qualify from UEFA Group 8. Stein relinquished the Scotland job after this defeat to concentrate on his full-time role with Celtic.

In the 1966–67 European Cup, Celtic progressed through the first two rounds with relatively comfortable wins against Zurich and Nantes. Celtic then faced Yugoslav side Vojvodina, who Chalmers later described as "the best team we played in the whole tournament". A miss-kick by Tommy Gemmell allowed Vojvodina to score the only goal of the first leg, played in Yugoslavia. In the return game, Celtic drew the aggregate score level with a goal by Chalmers in the 58th minute. Stein was agitated during the game, frequently glancing at his watch. Near the end, he remarked to Sean Fallon that "it looks like bloody Rotterdam!", citing where a play-off match would have been held if the tie had finished level. Instead, McNeill headed in a tie-winning goal from a corner kick during injury time. Celtic then defeated Dukla Prague 3–1 in the first (home) leg of the semi-final, with Wallace scoring twice. In the return game, Celtic sustained heavy pressure but held out for a goalless draw. It became a Common belief that Stein had abandoned his attacking principles for that game, but Bobby Lennox, McNeill and Chalmers all later said that Stein had not set out defensive tactics beforehand.

The following season, Celtic won the League and League Cup for the third season in a row. In 1969 they won another domestic treble, their second in three years. In 1970, Stein led Celtic to a League and League Cup double; they also finished runners-up in the Scottish Cup. He also guided them to their second European Cup Final, knocking out Benfica and Leeds United en route, but they lost to Dutch side Feyenoord in Milan. Around this time, Manchester United made efforts to persuade Stein to join them as manager. Stein declined their advances, a decision he later told Alex Ferguson that he regretted.

The 1970s brought continued success on the domestic front. During this time Stein's Celtic completed a record of nine consecutive Scottish league championships, equalling a world record held at the time by MTK Budapest and CSKA Sofia This sustained success became routine to the extent that attendance figures fell during the later part of the run, with the decline at Celtic being above the league average. This prompted the Scottish Football League to consider league reconstruction, which was enacted in 1975.

Stein was badly injured in a car crash in 1975; he nearly died but eventually recovered. For most of season 1975–76, Sean Fallon assumed control as manager. Stein returned to his position at the start of the 1976–77 season. Davie McParland joined Celtic at this time, replacing Sean Fallon as assistant manager and working under Stein. McParland took charge of the 'tracksuit' aspects of coaching at Celtic whilst Stein watched from the touchline, still not fully recovered from the serious car smash he was involved in the year before. Stein signed Hibernian's long-serving captain, defender Pat Stanton. Later on in the season, Stein signed attacking midfielder Alfie Conn from Tottenham Hotspur. It was a transfer that surprised many, given Conn had played for Rangers in the early 70s, winning the European Cup Winners' Cup for them in 1972 and scoring in a 3–2 win over Celtic in the 1973 Scottish Cup Final. Conn became the first footballer post-World War II to play for both Rangers and Celtic. Celtic, helped considerably by Stanton's organisation of the defence, went on to win their tenth league and cup double; Celtic finished nine points ahead of Rangers in the league and beat them 1–0 in the cup final courtesy of an Andy Lynch penalty.

After Willie Ormond resigned as manager of Scotland in May 1977, Stein was approached about replacing him, but confirmed that he intended to remain at Celtic. Amindst averwhelming optimism incited by incumbent manager Ally MacLeod that Scotland would achieve great success at the 1978 FIFA World Cup, Stein was one of the few to caution against this: something he would be proven right in, as Scotland subsequently failed to qualify from the group stage.

Stein was appointed Scotland manager on a full-time basis on 5 October 1978, which was his 56th birthday. 65,872 attended his first game in charge, a 3–2 win against Norway at Hampden, despite the bus services in Glasgow being on strike. Stein had picked a team with only players based in England, but he felt that he could bring through more home-based players. He also believed that Scotland had tended to play with too much emotion and naivety, which he wanted to replace with an emphasis on retaining possession of the football. Two defeats to Belgium meant that Scotland failed to qualify for the 1980 European Championship. This was followed by losses to Northern Ireland and England in the 1980 British Home Championship, which led to some criticism in the media.

The Scots' form improved in their qualifying campaign for the 1982 FIFA World Cup, finishing top of their group and only losing once. Scotland travelled to Spain in the summer of 1982 in what would be the only occasion Stein would manage a side at the finals of major international tournament. Scotland swept into a 3–0 lead in their first group game against New Zealand, but then careless defending saw the Kiwis stage a comeback, scoring twice. Scotland added a further two goals near the end to restore their three-goal advantage, but concern was raised at the potential repercussions of the two New Zealand goals should goal difference become a factor. Brazil were the next opponents, and Stein make a number of changes to his side. Danny McGrain and Kenny Dalglish were surprise omissions, whilst David Narey, Willie Miller and Steve Archibald came into the side. Graeme Souness took over the captaincy in McGrain's absence. Narey gave Scotland a shock lead when he opened the scoring with a powerful right-foot strike. Zico equalised just before half-time from a free kick, and then Brazil took control in the second half, scoring three times to send Scotland crashing to a 4–1 defeat. The final group game paired Scotland against the Soviet Union; both teams were level on two points each, but the Soviet's had a better goal difference. Joe Jordan came into the team for his first appearance at the 1982 World Cup, and gave Scotland the lead in the first half, but the Soviet's rallied and scored twice in the second half. The second goal was particularly galling for the Scots, and came as a result of defenders Alan Hansen and Willie Miller colliding with one another, allowing Ramaz Shengelia a clear run in at goal to score. Graeme Souness netted a late equaliser for Scotland, but there was little time left for Scotland to score a winner, and the game finished 2–2 with Scotland going out on goal difference. Stein commented after the final match: "I am very disappointed we have not qualified. If we had played the way we did in any other section we would have gone through", adding "We have proved we can compete at this level, if not win..... Tonight I think we have done Scotland proud, both on and off the field."

On 10 September 1985, Scotland played Wales at Ninian Park, Cardiff, in a 1986 World Cup qualification match. Wales had been leading 1–0 by a Mark Hughes goal, before Scotland were awarded a penalty kick with 9 minutes left. Davie Cooper scored to make the score 1–1; the resulting draw secured a qualification play-off against Australia. Stein, who had been in poor health and under intense pressure, suffered a heart attack at the end of the game and died shortly afterwards in the stadium's medical room. He was 62 years old. Stein was cremated at Linn Crematorium in Glasgow, at a private ceremony at which many past and present football figures were in attendance.

His death had a profound effect on Stein's assistant, and Aberdeen manager, Alex Ferguson. Ferguson regarded Stein as a mentor and was horrified by his sudden death. Ferguson was appointed interim manager and led the Scotland team to the 1986 World Cup. Scotland failed to progress beyond the group stage; Andy Roxburgh was appointed as Stein's permanent successor.

Since his death, Stein has been inducted into the Scottish Sports Hall of Fame and the Scottish Football Hall of Fame. He has been voted the greatest ever Scottish manager, and in 2002 he was voted the greatest ever Celtic manager by the club's fans. When Celtic Park was rebuilt in the 1990s, the traditional Celtic fans' end of the stadium was named the Jock Stein Stand. Stein was voted the greatest Scottish football manager in a 2003 poll by the Sunday Herald newspaper. A bust of Stein was presented to Celtic by a supporters' group and now sits in the foyer of the stadium.

He married Jeanie McAuley in 1946 and they were together until his death 39 years later. They had a son George and daughter Ray. Ray died of cancer on 9 September 2006 aged 59, and was outlived by her mother, who died on 2 August 2007 at the age of 80. George is now living in Switzerland, where he was already living by the time of his father's death.

On 5 March 2011 a over lifesize bronze statue of Stein by the Sculptor, John McKenna, was unveiled outside Celtic Park. The statue depicts Jock Stein holding the European Cup, won in 1967. Celtic chairman John Reid said;

With the 3–1 aggregate victory against Dukla, Celtic progressed to the 1967 European Cup Final. The other finalist was Italian giants Inter Milan, a previous winner of the competition. Despite initially falling behind to an Italian penalty, his team triumphed 2–1, winning much admiration for the positive attacking quality of their football. In winning club football's most prestigious trophy, Stein became the first man not only to guide a Scottish club to champions of Europe, but also the first to achieve this honour with a British club. He also became the first manager in history to win all competitions entered. The feat was done with a team all born within 30 miles of Glasgow. In a conversation with Bill Shankly shortly afterwards, Shankly famously told him "John, you're immortal now".