Smeaton was born in Austhorpe, Leeds, England. After studying at Leeds Grammar School he joined his father's law firm, but left to become a mathematical instrument maker (working with Henry Hindley), developing, among other instruments, a pyrometer to study material expansion and a whirling speculum or horizontal top (a maritime navigation aid). In 1750, his premises were in the Great Turnstile in Holborn.

He was elected a Fellow of the Royal Society in 1753, and in 1759 won the Copley Medal for his research into the mechanics of waterwheels and windmills. His 1759 paper "An Experimental Enquiry Concerning the Natural Powers of Water and Wind to Turn Mills and Other Machines Depending on Circular Motion" addressed the relationship between pressure and velocity for objects moving in air (Smeaton noted that the table doing so was actually contributed by "my friend Mr Rouse" "an ingenious gentleman of Harborough, Leicestershire" and calculated on the basis of Rouse's experiments), and his concepts were subsequently developed to devise the 'Smeaton Coefficient'. Smeaton's water wheel experiments were conducted on a small scale model with which he tested various configurations over a period of seven years. The resulting increasing efficiency in water power contributed to the Industrial Revolution.

Recommended by the Royal Society, Smeaton designed the third Eddystone Lighthouse (1755–59). He pioneered the use of 'hydraulic lime' (a form of mortar that will set under water) and developed a technique involving dovetailed blocks of granite in the building of the lighthouse. His lighthouse remained in use until 1877 when the rock underlying the structure's foundations had begun to erode; it was dismantled and partially rebuilt at Plymouth Hoe where it is known as Smeaton's Tower.

In his 1759 paper "An Experimental Enquiry Concerning the Natural Powers of Water and Wind to Turn Mills and Other Machines Depending on Circular Motion" Smeaton developed the concepts and data which became the basis for the Smeaton coefficient, the lift equation used by the Wright brothers. It has the form:

Employing his skills as a mechanical Engineer, he devised a water engine for the Royal Botanic Gardens at Kew in 1761 and a watermill at Alston, Cumbria in 1767 (he is credited by some with inventing the cast-iron axle shaft for water wheels). In 1782 he built the Chimney Mill at Spital Tongues in Newcastle upon Tyne, the first 5-sailed smock mill in Britain. He also improved Thomas Newcomen's atmospheric engine, erecting one at Chacewater mine, Wheal Busy, in Cornwall in 1775.

Smeaton died after suffering a stroke while walking in the garden of his family home at Austhorpe, and was buried in the parish church at Whitkirk, West Yorkshire. He is highly regarded by other Engineers, having contributed to the Lunar Society and founded the Society of Civil Engineers in 1771. He coined the term civil Engineers to distinguish them from military Engineers graduating from the Royal Military Academy at Woolwich. The Society was a forerunner of the Institution of Civil Engineers, established in 1818, and was renamed the Smeatonian Society of Civil Engineers in 1830. His pupils included canal Engineer william Jessop and Architect and Engineer Benjamin Latrobe.

Smeaton is considered to be the first expert witness to appear in an English court. Because of his expertise in engineering, he was called to testify in court for a case related to the silting-up of the harbour at Wells-next-the-Sea in Norfolk in 1782. He also acted as a consultant on the disastrous 63-year-long New Harbour at Rye, designed to combat the silting of the port of Winchelsea. The project is now known informally as "Smeaton's Harbour", but despite the name his involvement was limited and occurred more than 30 years after work on the harbour commenced.

In 1789 Smeaton applied an idea by Denis Papin, by using a force pump to maintain the pressure and fresh air inside a diving bell. This bell, built for the Hexham Bridge project, was not intended for underwater work, but in 1790 the design was updated to enable it to be used underwater on the breakwater at Ramsgate Harbour. Smeaton is also credited with explaining the fundamental differences and benefits of overshot versus undershot water wheels. Smeaton experimented with the Newcomen steam engine and made marked improvements around the time James Watt was building his first engines (c. late 1770s).

Smeaton is one of six civil Engineers depicted in the Stephenson stained glass window, designed by william Wailes and unveiled in Westminster Abbey in 1862. A memorial stone commemorating Smeaton himself was unveiled in the Abbey on 7 November 1994, by Noel Ordman, President of the Smeatonian Society of Civil Engineers.

In 2003 Smeaton was named among the top 10 technological innovators in Human Accomplishment: The Pursuit of Excellence in the Arts and Sciences, 800 B.C. to 1950. He is mentioned in the song "I Predict a Riot" (as a symbol of a more dignified and peaceful epoch in Leeds history; and in reference to a Junior School House at Leeds Grammar School, which lead singer Ricky Wilson attended) by the indie rock band Kaiser Chiefs, who are natives of Leeds.

John Smeaton Academy, a secondary school in the suburbs of Leeds adjacent to the Pendas Fields estate near Austhorpe, is named after Smeaton. He is also commemorated at the University of Plymouth, where the Mathematics and Technology Department is housed in a building named after him. A viaduct in the final stage of the Leeds Inner Ring Road, opened in 2008, was named after him.