In 1509, at the age of 18, Íñigo took up arms for Antonio Manrique de Lara, Duke of Nájera. His diplomacy and leadership qualities earned him the title "servant of the court", which made him very useful to the Duke. Under the Duke's leadership, Íñigo participated in many battles without injury. But at the Battle of Pamplona in 1521 he was gravely injured when a French-Navarrese expedition force stormed the fortress of Pamplona on May 20, 1521. A cannonball hit him in the legs, wounding his right leg and fracturing the left in multiple places. Íñigo was returned to his father's castle in Loyola, where, in an era that knew nothing of anesthetics, he underwent several surgical operations to repair his legs, having the bones set and then rebroken. In the end these operations left one leg shorter than the other: Íñigo would limp for the rest of his life, and his military career was over.

After he had recovered sufficiently to walk again, Íñigo resolved to begin a pilgrimage to the Holy Land to "kiss the earth where our Lord had walked", and to do stricter penances. He thought that his plan was confirmed by a vision of the Virgin Mary and the infant Jesus he experienced one night, which resulted much consolation to him. In March 1522, he visited the Benedictine monastery of Santa Maria de Montserrat. There, he carefully examined his past sins, confessed, gave his fine clothes to the poor he met, wore a "garment of sack-cloth", then hung his sword and dagger at the Virgin's altar during an overnight vigil at the shrine.

In September 1523, Íñigo made a pilgrimage to the Holy Land with the goal of settling there. He remained there from September 3 to 23 but he was sent back to Europe by the Franciscans.

He returned to Barcelona and at the age of thirty-three began to attend a free public grammar school to prepare himself for entrance to a university. When his preparation was complete, he then went on to the University of Alcalá, where he studied Theology and Latin from 1524 to 1534.

"On the morning of the 15th of August, 1534, in the chapel of church of Saint Peter, at Montmartre, Loyola and his six companions, of whom only one was a priest, met and took upon themselves the solemn vows of their lifelong work."

In 1539, with Saint Peter Faber and Saint Francis Xavier, Ignatius formed the Society of Jesus, which was approved in 1540 by Pope Paul III. Ignatius was chosen as the first Superior General of the order and invested with the title of Father General by the Jesuits.

In 1548 Ignatius was briefly brought before the Roman Inquisition for examination of his book of Spiritual Exercises. But he was released and the book was finally given papal permission to be printed. It was published in a format such that the exercises were designed to be carried out over a period of 28–30 days.

During the years 1553–1555, Ignatius dictated his autobiography to his secretary, Father Gonçalves da Câmara. This autobiography ("Autobiografía de San Ignacio de Loyola" in Wikisource in Spanish) is a valuable key for understanding his Spiritual Exercises. It was kept in the archives of the Jesuit order for about 150 years, until the Bollandists published the text in Acta Sanctorum.

Ignatius died in Rome on 31 July 1556, as a result of the Roman Fever, a severe case of malaria that recurred in Rome, Italy, at different points in history. An autopsy revealed that he also had several kidney and bladder stones, a probable cause of the abdominal pains he suffered from later in life. At this time he was placed in a wooden shrine, his body was then covered with his priestly garments. On 1 August the shrine was then buried in the small Maria della Strada Church. In 1568 that church was pulled down and replaced with the Church of the Gesù. Saint Ignatius was put into a new coffin and reinterred in the new church.

Ignatius was beatified by Pope Paul V on 27 July 1609, and canonized by Pope Gregory XV on 12 March 1622. His feast day is celebrated annually on 31 July, the day he died. Saint Ignatius is venerated as the patron saint of Catholic Soldiers, the Military Ordinariate of the Philippines, the Roman Catholic Archdiocese of Baltimore, the Basque Country, and various towns and cities in his native region.

Ignatius was beatified in 1609, and then canonized, receiving the title of Saint on 12 March 1622. His feast day is celebrated on 31 July. He is the patron saint of the Basque provinces of Gipuzkoa and Biscay as well as the Society of Jesus, and was declared patron saint of all spiritual retreats by Pope Pius XI in 1922. Ignatius is also a foremost patron saint of Soldiers.

In 1949 he was the subject of a Spanish biographical film The Captain from Loyola in which he was played by Rafael Durán.

There he encountered some women who had been called before the Inquisition. These women were considered alumbrados (Illuminated, Illuminati, or Enlightened Ones) – a group that was linked in their zeal and spirituality to Franciscan reforms, but had incurred mounting suspicion on the part of the administrators of the Inquisition. At one point, Íñigo was preaching on the street when three of these devout women began to experience ecstatic states. "One fell senseless, another sometimes rolled about on the ground, another had been seen in the grip of convulsions or shuddering and sweating in anguish." This suspicious activity had taken place while Íñigo was preaching without a degree in theology. Íñigo was then singled out for interrogation by the Inquisition; however, he was later released.

He arrived during a period of anti-Protestant turmoil which forced John Calvin to flee France. Very soon after his arrival Ignatius had gathered around him six key companions, all of whom he had met as fellow students at the University.— Francis Xavier, Alfonso Salmeron, Diego Laynez, and Nicholas Bobadilla, all Spanish; Peter Faber, a Savoyard; and Simão Rodrigues of Portugal. Peter Faber, a young man from Savoy in the south of France, and Francis Xavier, a nobleman from the eastern end of the Basque country, were his first roommates, and would become his closest associates in founding the Jesuit order.

In 2016, he was the subject of a Filipino film Ignacio de Loyola in which he was played by Andreas Muñoz.