Lieberstein grew up in Westport, Connecticut, the son of Judith and Stanley Lieberstein. He is Jewish. He attended Staples High School followed by Hamilton College where he joined Chi Psi and graduated in 1989 with a major in economics (he "wanted to be a financier of some kind"). Lieberstein wrote references to the fact that Office character Andy Bernard was a Chi Psi from Cornell into the storyline of several episodes of the show. Lieberstein's first job after graduation was as an auditor at Peat Marwick International, a job that only lasted six months. He followed that with part-time work in his father's law firm, "working as little as [he] could so [he] could write."

Lieberstein's first Emmy Award was as a Producer, sharing a 1999 Emmy for "Outstanding Animated Program (For Programming One Hour or Less)" for his work in King of the Hill.

Lieberstein's work on The Office has resulted in numerous awards. In June 2007, Lieberstein shared in a Daytime Emmy Award for "Outstanding Broadband Program – Comedy", for his work on The Office: Accountants webisodes. As an actor, Lieberstein shared in a 2006 Screen Actors Guild Award for "Outstanding Performance by an Ensemble in a Comedy Series"; as a Writer, he shared a 2006 Writers Guild of America Award for the series, in addition to a WGA Award nomination for "The Coup". As co-executive Producer, he shared a 2006 Emmy Award for "Outstanding Comedy Series".

On June 12, 2008, Variety magazine reported that he would become one of the executive producers of The Office.

Lieberstein received an Honorary Doctorate of Fine Arts degree from Hamilton College on May 22, 2011.

In a SuicideGirls interview, Lieberstein noted that "as an actor, which is just a very small percentage of me, I don’t feel Toby while I’m writing. It’s the hardest of the characters to access." In an interview for his alma mater, Hamilton College, Lieberstein commented on the bigger picture: