Lerner was raised in an Orthodox Jewish family in North West Washington D.C., the eldest of three children born to Mayer, a 1921 emigrant from Palestine, and Ethel, who emigrated from Lithuania. He has one brother Lawrence and one sister, Esther. He attended Raymond Elementary School, McFarland Junior High, and graduated from Roosevelt High School in 1944. He then served with the U.S. Army as a typist during the latter part of World War II. He then went on to attend George Washington University via the G.I. Bill where he received first an Associate of Arts and then in 1949, he graduated with a L.L.B. from The George Washington University Law School. While in law school, he sold homes on the weekends which piqued his interest in real estate.

On June 17, 1951, he married Annette M. Lerner. They have three children: Mark D. Lerner (married to Judy Lenkin), Debra Lerner Cohen (married Edward L. Cohen) and Marla Lerner Tanenbaum (married Robert K. Tanenbaum). Ted Lerner has nine grandchildren.

In 1952, he borrowed $250 from his wife and founded the real estate company Lerner Enterprises in Rockville, Maryland. It operates primarily throughout the Washington, D.C. metropolis. Lerner Enterprises is the largest private landowner in the Washington, D.C. region.

Lerner Corporation, a closely held corporation but not a "close corporation" within the meaning of Maryland corporation law, was organized in 1965. It was authorized to issue 95 shares of no-par Common stock. Theodore acquired seventy shares, and Lawrence acquired 25 shares. Theodore was President and one of three Directors. Prior to September 1983, Lawrence was secretary and a Director.

The brothers' relationship deteriorated, and in September 1983, Theodore caused Lawrence to be removed as an officer and Director. Lawrence sued Theodore, Theodore undertook to "freeze-out" Lawrence as a stockholder, and Lawrence brought an action to enjoin the freeze-out. The Court of Appeals affirmed the trial court's entry of a preliminary injunction. See Lerner v. Lerner, 306 Md. 771, 511 A.2d 501 (1986). Prior to trial of that case, however, the brothers entered into a settlement agreement dated October 16, 1987 (Settlement Agreement or the Agreement). The Settlement Agreement provided that (1) Theodore would remain the chief operating officer of Lerner Corporation, (2) Lawrence would no longer be involved actively in Lerner Corporation but would continue to receive shareholder distributions, and (3) Theodore would have permission to use the resources of Lerner Corporation to benefit his other financial projects.

The Annette M. and Theodore N. Lerner Family Foundation provides support to many organizations, including: Food and Friends; The Hebrew University of Jerusalem; Shady Grove Adventist Hospital; Hadley's Park; the Weizmann Institute of Science; the Scleroderma Foundation of Greater Washington; YouthAids; Junior Achievement of the Greater Washington Area; the Charles E. Smith Jewish Day School; and the Jewish Community Center of Greater Washington, among many others. Ted and his wife Annette are founding members of the United States Holocaust Memorial Museum in Washington, D.C. The American Academy of Achievement awarded Ted Lerner the Golden Plate Award of Excellence in 1990.

The Washington Nationals franchise was formerly owned and operated by Major League Baseball from February 15, 2002, until the official transfer of ownership on July 24, 2006. The Lerner Family is the majority owner of the franchise, controlling over 90% of the shares.