Gary Wayne Coleman was born in Zion, Illinois, outside Chicago, on February 8, 1968. He was adopted by W. G. Coleman, a fork-lift operator, and Edmonia Sue, a nurse practitioner. Due to focal segmental glomerulosclerosis (a congenital chronic kidney disease), and the corticosteroids and other medications used to treat it, his growth was limited to 4 ft 8 in (142 cm), and his face retained a childlike appearance well into adulthood. He underwent two unsuccessful kidney transplants in 1973 and 1984, and required frequent dialysis.

In 1974, Coleman's career began when he appeared in a commercial for Harris Bank. His line (after the announcer said, "You should have a Harris banker.") was "You should have a Hubert doll." "Hubert" was a stuffed lion representing the Harris bank logo. The same year, he appeared in an episode of Medical Center.

While best known for his role on Diff'rent Strokes, Coleman had appeared earlier on television, on The Jeffersons as Raymond, George Jefferson's nephew, and on Good Times as Penny's friend Gary. He also appeared in a 1977 pilot for a revival of The Little Rascals as Stymie. VH1 rated Coleman first on a list of "100 Greatest Child Stars" on television.

Coleman was cast in the role of Arnold Jackson in Diff'rent Strokes, portraying one of two black brothers from Harlem adopted by a wealthy white widower in Manhattan. The series was broadcast from 1978 to 1986.

Coleman became a popular figure, starring in a number of feature films and television films, including The Kid from Left Field (1979), On the Right Track (1981) and The Kid with the Broken Halo (1982). The latter eventually served as the basis for The Gary Coleman Show in 1982. He also made video game appearances in The Curse of Monkey Island (1997) and Postal 2 (2003). In 2005, Coleman appeared in John Cena's music video for his single "Bad, Bad Man" (from the album You Can't See Me), Coleman played himself as a villain taking Michael Jackson and Madonna hostage. The video was a spoof of 80s culture, focusing on The A-Team.

In 1989, Coleman sued his adoptive parents and former Business advisor for $3.8 million, for misappropriating his trust fund, and won a $1,280,000 judgment in 1993.

Coleman built and maintained miniature railroads in his homes in several states. One of his train layouts appears in the September 1990 issue of Railroad Model Craftsman. Coleman is photographed on the front cover, with his "Rio Grande" layout.

In a 1993 television interview, Coleman said he had twice attempted suicide by overdosing on pills. Around the same time he was living in Denver, Colorado, where he hosted a Sunday night show on local radio station KHIH titled Gary Coleman's Colorado High, in which he played light jazz and new-age music. He gave part of his salary to the Colorado Kidney Foundation.

In 1998, Coleman was charged with assault while he was working as a security guard. Tracy Fields, a Los Angeles bus driver and fan of Coleman's work on Diff'rent Strokes, approached him in a California mall and requested his autograph, while Coleman was shopping for a bulletproof vest. Coleman refused to give her an autograph, an argument ensued, and Fields reportedly mocked Coleman's lackluster career as an actor. Coleman then punched Fields in the face several times in front of witnesses. He was arrested and later testified in court that she threatened him, and he defended himself. "She wouldn't leave me alone. I was getting scared, and she was getting ugly," he said. Coleman pleaded no contest to one count of assault, received a suspended jail sentence, and was ordered to pay Fields' $1,665 hospital bill, as well as take anger management classes.

The weekend after Coleman's death, a scheduled funeral was postponed and later canceled due to a dispute regarding the disposition of his estate and remains among Coleman's adoptive parents, former Business associate Anna Gray, and Price. Coleman's former manager, Dion Mial, was involved initially, but withdrew after Coleman's 1999 will, which named Mial as executor and directed that his wake be "...conducted by those with no financial ties to me and can look each other in the eyes and say they really cared personally for Gary Colemen [sic]", turned out to be superseded by a later one replacing Mial with Gray, and directing "...that there be no funeral Service, wake, or other ceremony memorializing my passing."

In the 2003 California recall election, Coleman was a candidate for governor. This campaign was sponsored by the free newsweekly East Bay Express as a satirical comment on the recall. After Arnold Schwarzenegger declared his candidacy, Coleman announced that he would vote for Schwarzenegger. Coleman placed 8th in a field of 135 candidates, receiving 14,242 votes.

Coleman is parodied in Avenue Q, which won the 2004 Tony Award for Best Musical. A fictionalized version of Coleman works as the superintendent of the apartment complex where the musical takes place. In the song "It Sucks to Be Me", he laments his fate. On Broadway, the role was originated by Natalie Venetia Belcon.

In June, Coleman's remains were cremated, in accordance with his wishes, after a Utah judge agreed that there was no dispute regarding that issue; but disposition of the ashes was delayed pending a judicial decision on permanent control of the estate. While Coleman's final will, signed in 2005, named Gray as executor and awarded his entire estate to her, Coleman and Price married in 2007. Although they divorced in 2008, Price claimed in a court petition that she remained Coleman's common-law wife, sharing bank accounts and the couple presented themselves publicly as husband and wife until Coleman's death, an assertion that, if validated by the court, would make her the lawful heir.

In 2007, Coleman was cited for misdemeanor disorderly conduct in Provo, Utah, after a "heated discussion" in public with his wife.

In 2008, Coleman was involved in a car accident after an altercation at a Payson, Utah bowling alley, which began when Colt Rushton, age 24, photographed Coleman without his permission. The two men argued, according to witnesses. In the parking lot, Coleman allegedly backed his truck into Rushton, striking his knee and pulling him under the vehicle, before hitting another car. Rushton was treated at a local hospital for minor injuries and released. Coleman later pleaded no contest to charges of disorderly conduct and reckless driving, and was fined $100. In 2010, he settled a civil suit related to the incident for an undisclosed amount.

Very few details of Coleman's medical history have been made public. His short stature (4 feet, 8 inches or 142 centimeters) stemmed from congenital kidney disease and its treatment. He underwent at least two unsuccessful kidney transplants early in his life and required frequent dialysis, which he preferred not to discuss. In 2009, Coleman underwent heart surgery, details of which were never made public, but he is known to have developed pneumonia postoperatively. In January 2010, Coleman was hospitalized after a seizure in Los Angeles, and in February he suffered another seizure on the set of The Insider television program.

The hospital later issued a statement confirming that Coleman had completed an advance health care directive granting Price permission to make medical decisions on his behalf. An investigation by Santaquin police was closed on October 5, 2010, after the medical examiner ruled Coleman's death accidental, and no evidence of wrongdoing could be demonstrated.

In May 2012, Judge James Taylor ruled that while Price had indeed lived in Coleman's home after their marriage ended, their relationship at the time of his death failed to meet Utah's standard for a common-law marriage. The disposition of his ashes remains unreported. Price said, were she granted disposition, she would scatter the ashes at the Golden Spike National Historic Site in Utah as a tribute to Coleman's lifelong love of trains.