Lin was born in 1895 in the town of Banzai, Pinghe, Zhangzhou, Fujian. The mountainous region made a deep impression on his consciousness, and thereafter, he would constantly consider himself a child of the mountains (in one of his books he commented that his idea of hell was a city apartment).

Lin studied for his bachelor's degree at Saint John's University in Shanghai, then received a half-scholarship to continue study for a doctoral degree at Harvard University. He later wrote that in the Widener Library he first found himself and first came alive, but he never saw a Harvard-Yale game. He left Harvard early, since he couldn't afford to study in Harvard anymore,and moved to work with the Chinese Labor Corps in France and eventually to Germany, where he completed his requirements for a doctoral degree in Chinese philology at the University of Leipzig. From 1923 to 1926 he taught English literature at Peking University.

His humor magazine, Lunyu banyuekan (The Analects Fortnightly, 1932-40, 1945-49) featured essays by prominent Writers such as Hu Shi, Lao She, Lu Xun, and Zhou Zuoren and attracted a wide readership. He was a key figure in introducing the Western concept of humor, which he felt China had lacked. Lin coined the term youmo (humor) in 1924 and used The Analects to promote his conception of humor as the expression of a tolerant, cosmopolitan, understanding and civilized philosophy of life. In 1933, Lu Xun attacked the Analects for being apolitical and dismissed Lin's elegant xiaopin wen 小品文, or small essays, as "bric a brac for the bourgeoisie." Lu Xun nevertheless maintained a cordial relationship with Lin and continued to contribute to his journal.

Works by Lin in Chinese or published in China to 1935 include:

His many works represent an attempt to bridge the cultural gap between the East and the West. He was nominated for the Nobel Prize in Literature in 1940 and 1950.

Lin's political writings in English sold fewer copies than his cultural works and were more controversial. Between Tears and Laughter (1943) broke with the genial tone of his earlier English writings to criticize Western racism and imperialism.

After the attack on Pearl Harbor, Lin traveled in China and wrote favorably of the war effort and Chiang Kai-shek in Vigil of a Nation (1944). American China Hands such as Edgar Snow criticized the works.

After he returned to New York in the late 1950s, Lin renewed his interest in Christianity. His wife was a devout believer, and Lin admired her serenity and humility. After attending services with her at the Madison Avenue Presbyterian Church for several months, he joined the church and announced his return to the faith. His 1959 book From Pagan to Christian explained this move, which many of his readers found surprising.

His father was a Christian minister. His journey of faith from Christianity to Taoism and Buddhism, and back to Christianity in his later life was recorded in his book From Pagan to Christian (1959).

With his facility for both Chinese and English idiom, Lin presided over the compilation of a Chinese-English dictionary, Lin Yutang's Chinese-English Dictionary of Modern Usage (1972), which contains a massive English index to definitions of Chinese terms. The work was undertaken at the newly founded Chinese University of Hong Kong.

The first full-length academic study of Lin in English is Diran John Sohigian's "The Life and Times of Lin Yutang" (Columbia University Ph.D. diss., 1991). Jing Tsu's Sound and Script in Chinese Diaspora (Cambridge, MA: Harvard University Press, 2010) gives a detailed account of Lin Yutang's typewriter and its role in the context of late 19th century script reform, Chinese national language reform in the early twentieth century and the fascinating story of his typewriting keyboard and machine translation research during the Cold War.

Although his major books have remained in print, Lin is a thinker whose place in modern Chinese intellectual history has been overlooked until recently. Lin themed conventions have been organized in Taiwan and Lin's native Fujian, and in December 2011, the International Conference on the Cross-cultural Legacy of Lin Yutang in China and America was held at City University of Hong Kong, with professional and private scholars from mainland China, Hong Kong, Taiwan, Japan, Malaysia, the United States, Germany and Slovakia. The organizer of the conference was Dr. Qian Suoqiao, author of the book, Liberal Cosmopolitan: Lin Yutang and Middling Chinese Modernity (Leiden; Boston: Brill, 2010).