Schwarzman attended the Abington School District in suburban Philadelphia and graduated from Abington Senior High School in 1965. He attended Yale University during the same period as George W. Bush, one year behind him (both were in the Skull and Bones society) and graduated in 1969. He briefly served in the U.S. Army Reserve before attending Business school. He then went on to Harvard Business School and graduated in 1972.

Schwarzman met his first wife, Ellen Philips, during his second year at Harvard Business School, where she worked as a researcher and helped grade essays. She was the daughter of Jesse Philips, a wealthy Ohio industrialist. They were married in 1971 and divorced in 1990. They had two children:

Schwarzman's first job in financial services was with Donaldson, Lufkin & Jenrette, a now-defunct investment bank. After Business school, Schwarzman worked at the investment bank Lehman Brothers, and became a managing Director at 31, then head of global mergers and acquisitions. In 1985, Schwarzman and his boss Peter Peterson started Blackstone, which originally focused on mergers and acquisitions.

In 1995, Schwarzman married Christine Hearst, an intellectual-property Lawyer who grew up on Long Island. She was the daughter of Peggie and Peter Mularchuk of Hicksville, New York. Her Father was a fireman. She was recently divorced from Austin Hearst, grandson of newspaper tycoon Randolph Hearst. Rabbi Bertram Siegel co-officiated along with the Rev. Sam Matarazzo, a Roman Catholic priest. She has one child from a previous marriage.

He lives in a duplex apartment at 740 Park Avenue previously owned by the Mayflower descendant George Brewster and by John D. Rockefeller Jr. Schwarzman purchased the apartment from Saul Steinberg in 2000 for just under $30 million. However, an article in The New Yorker claims that the apartment was purchased for $37 million.

Schwarzman has been an adjunct professor at the Yale School of Management and was chairman of the board of trustees of the John F. Kennedy Center for the Performing Arts from 2004 to 2010.

On February 13, 2007, Schwarzman celebrated his 60th birthday at the Armory on Park Avenue. Guests included Colin Powell, Mayor of New York City Michael Bloomberg, Donald Trump, and Cardinal Edward M. Egan of New York. The climax of the evening was a half-hour live performance by Rod Stewart, for which he was reportedly paid $1 million. In February, 2017, he had lavish 70th birthday party in Florida, estimated to have cost $5–7 million.

In early 2008 Schwarzman announced that he contributed $100 million toward the expansion of the New York Public Library, for which he serves as a trustee. The central reference building on 42nd Street and Fifth Avenue was renamed The Stephen A. Schwarzman Building.

In 2010, Schwarzman drew controversy for comparing President Obama's proposal to increase taxation on 'carried interest' profits to Hitler's invasion of Poland in 1939. Schwarzman later apologized for the analogy.

In September 2011, Schwarzman was listed as a member of the International Advisory Board of the Russian Direct Investment Fund.

On April 21, 2013, Schwarzman announced a $100 million personal gift to establish and endow a scholarship program in China, Schwarzman Scholars, modeled after the Rhodes Scholarship program. Schwarzman simultaneously announced a fundraising campaign with a goal of $200 million. The Schwarzman Scholars program will be housed at Tsinghua University, one of China's most prestigious universities. The first class of 100 students is slated for 2016, upon completion of Schwarzman College, designed by Robert A. M. Stern, Dean of the Yale School of Architecture. In January 2016, Schwarzman was on the cover of the Shanghai Business Review to share his vision about the Chinese economy against the backdrop of his scholarship. The story was supported by Kevin Rudd, former Prime Minister of Australia and on the International Advisory Board of Schwarzman Scholars.

In spring 2015 Peter Salovey, the President of Yale University, announced that Schwarzman contributed $150 million to fund a campus center in the university's historic "Commons" dining facility. Additionally, Schwarzman is also a member of the Berggruen Institute's 21st Century Council.

In late 2016, Schwarzman "helped put together a team of corporate executives to advise Trump on jobs and the economy. The group includes J P Morgan Chase (JPM) CEO Jamie Dimon, Walt Disney (DIS) boss Bob Iger and former GE leader Jack Welch" which became Trump's Strategic and Policy Forum. In February, Schwarzman was named as Chair of the 16-member President's Strategic and Policy Forum, which brings together "CEOs of America's biggest corporations, banks and investment firms" to consult with the President on "how to create jobs and improve growth for the U.S. economy".

According to Forbes Magazine, he has a net worth of $11.2 billion USD as of January 2017. In 2014, Schwarzman was named as one of Bloomberg's 50 Most Influential people of the year. In 2016, Schwarzman was again named as one of Bloomberg's 50 Most Influential people of the year. In 2004, Schwarzman donated a new football stadium to Abington Senior High School—the Stephen A. Schwarzman Stadium. In 2007, Schwarzman was listed among Time Magazine's 100 Most Influential People in The World.

In early 2018, it was announced that Schwarzman gave $25 million to Abington High School, his alma mater. However, this donation was contingent on several conditions, including naming rights to the school. After the public learned about the deal, a new agreement was made and Schwarzman removed several of the conditions for his donation.