Shortly after Hardy's death, the executors of his estate burnt his letters and notebooks, but twelve documents survived, one of them containing notes and extracts of newspaper stories from the 1820s, and research into these has provided insight into how Hardy used them in his works. In the year of his death Mrs Hardy published The Early Life of Thomas Hardy, 1841–1891, compiled largely from contemporary notes, letters, diaries, and biographical memoranda, as well as from oral information in conversations extending over many years.

Thomas Hardy was born on 2 June 1840 in Higher Bockhampton (then Upper Bockhampton), a hamlet in the parish of Stinsford to the east of Dorchester in Dorset, England, where his father Thomas (1811–1892) worked as a stonemason and local builder, and married his mother Jemima (née Hand; 1813–1904) in Beaminster, towards the end of 1839. Jemima was well-read, and she educated Thomas until he went to his first school at Bockhampton at the age of eight. For several years he attended Mr. Last's Academy for Young Gentlemen in Dorchester, where he learned Latin and demonstrated academic potential. Because Hardy's family lacked the means for a university education, his formal education ended at the age of sixteen, when he became apprenticed to James Hicks, a local Architect.

Hardy's friends during his apprenticeship to John Hicks included Horace Moule (one of the eight sons of Henry Moule), and the poet william Barnes, both ministers of religion. Moule remained a close friend of Hardy's for the rest of his life, and introduced him to new scientific findings that cast doubt on literal interpretations of the Bible, such as those of Gideon Mantell. Moule gave Hardy a copy of Mantell's book The Wonders of Geology (1848) in 1858, and Adelene Buckland has suggested that there are "compelling similarities" between the "cliffhanger" section from A Pair of Blue Eyes and Mantell's geological descriptions. It has also been suggested that the character of Henry Knight in A Pair of Blue Eyes was based on Horace Moule.

Hardy trained as an Architect in Dorchester before moving to London in 1862; there he enrolled as a student at King's College London. He won prizes from the Royal Institute of British Architects and the Architectural Association. He joined Arthur Blomfield's practice as assistant Architect in April 1862 and worked with Blomfield on All Saints' parish church in Windsor, Berkshire in 1862–64. A reredos, possibly designed by Hardy, was discovered behind panelling at All Saints' in August 2016. In the mid-1860s, Hardy was in charge of the excavation of part of the graveyard of St Pancras Old Church prior to its destruction when the Midland Railway was extended to a new terminus at St Pancras.

Hardy's first novel, The Poor Man and the Lady, finished by 1867, failed to find a publisher. He then showed it to his mentor and friend, the Victorian poet and Novelist, George Meredith, who felt that The Poor Man and the Lady would be too politically controversial and might damage Hardy's ability to publish in the Future. So Hardy followed his advice and he did not try further to publish it. He subsequently destroyed the manuscript, but used some of the ideas in his later work.

In 1870, while on an architectural mission to restore the parish church of St Juliot in Cornwall, Hardy met and fell in love with Emma Gifford, whom he married in Kensington in the autumn of 1874. In 1885 Thomas and his wife moved into Max Gate, a house designed by Hardy and built by his brother. Although they later became estranged, Emma's subsequent death in 1912 had a traumatic effect on him and after her death, Hardy made a trip to Cornwall to revisit places linked with their courtship; his Poems 1912–13 reflect upon her death. In 1914, Hardy married his secretary Florence Emily Dugdale, who was 39 years his junior. However, he remained preoccupied with his first wife's death and tried to overcome his remorse by writing poetry. In his later years, he kept a dog named Wessex, who was notoriously of ill temperament. Wessex's grave stone can be found on the Max Gate grounds. In 1910, Hardy had been awarded the Order of Merit and was also for the first time nominated for the Nobel Prize in Literature. He would be nominated for the prize eleven years later.

After he abandoned his first novel, Hardy wrote two new ones that he hoped would have more commercial appeal, Desperate Remedies (1871) and Under the Greenwood Tree (1872), both of which were published anonymously; it was while working on the latter that he met Emma Gifford, who would become his wife. In 1873 A Pair of Blue Eyes, a novel drawing on Hardy's courtship of Emma, was published under his own name. The term "cliffhanger" is considered to have originated with the serialised version of this story (which was published in Tinsley's Magazine between September 1872 and July 1873) in which Henry Knight, one of the protagonists, is left literally hanging off a cliff.

In his next novel Far from the Madding Crowd (1874), Hardy first introduced the idea of calling the region in the west of England, where his novels are set Wessex. Wessex had been the name of an early Saxon kingdom, in approximately the same part of England. Far from the Madding Crowd was successful enough for Hardy to give up architectural work and pursue a literary career. Over the next twenty-five years Hardy produced ten more novels.

Subsequently, the Hardys moved from London to Yeovil, and then to Sturminster Newton, where he wrote The Return of the Native (1878). Hardy published Two on a Tower in 1882, a romance story set in the world of astronomy. Then in 1885, they moved for the last time, to Max Gate, a house outside Dorchester designed by Hardy and built by his brother. There he wrote The Mayor of Casterbridge (1886), The Woodlanders (1887), and Tess of the d'Urbervilles (1891), the last of which attracted criticism for its sympathetic portrayal of a "fallen woman" and was initially refused publication. Its subtitle, A Pure Woman: Faithfully Presented, was intended to raise the eyebrows of the Victorian middle classes.

Hardy also produced a number of minor tales; one story, The Spectre of the Real (1894) was written in collaboration with Florence Henniker. An additional short-story collection, beyond the ones mentioned above, is A Changed Man and Other Tales (1913). His works have been collected as the 24-volume Wessex Edition (1912–13) and the 37-volume Mellstock Edition (1919–20). His largely self-written biography appears under his second wife's name in two volumes from 1928 to 1930, as The Early Life of Thomas Hardy, 1840–91 and The Later Years of Thomas Hardy, 1892–1928, now published in a critical one-volume edition as The Life and Work of Thomas Hardy, edited by Michael Millgate (1984).

Jude the Obscure, published in 1895, met with an even stronger negative response from the Victorian public because of its controversial treatment of sex, religion and marriage. Furthermore, its apparent attack on the institution of marriage caused further strain on Hardy's already difficult marriage because Emma Hardy was concerned that Jude the Obscure would be read as autobiographical. Some booksellers sold the novel in brown paper bags, and the Bishop of Wakefield, Walsham How, is reputed to have burnt his copy. In his postscript of 1912, Hardy humorously referred to this incident as part of the career of the book: "After these [hostile] verdicts from the press its next misfortune was to be burnt by a bishop – probably in his despair at not being able to burn me". Despite this, Hardy had become a Celebrity by the 1900s, but some argue that he gave up writing novels because of the criticism of both Tess of the D'Urbervilles and Jude the Obscure. The Well-Beloved, first serialised in 1892, was published in 1897.

In 1898 Hardy published his first volume of poetry, Wessex Poems, a collection of poems written over 30 years. While some suggest that Hardy gave up writing novels following the harsh criticism of Jude the Obscure in 1896, the poet C. H. Sisson calls this "hypothesis" "superficial and absurd". In the twentieth century Hardy published only poetry.

Thomas Hardy wrote in a great variety of poetic forms including lyrics, ballads, satire, dramatic monologues, and dialogue, as well as a three-volume epic closet drama The Dynasts (1904–08), and though in some ways a very traditional poet, because he was influenced by folksong and ballads, he "was never conventional," and "persistently experiment[ed] with different, often invented, stanza forms and metres, and made use of "rough-hewn rhythms and colloquial diction".

Some of Hardy's most famous poems are from "Poems of 1912–13", part of Satires of Circumstance (1914), written following the death of his wife Emma in 1912. They had been estranged for twenty years and these lyric poems express deeply felt "regret and remorse". Poems like “After a Journey,” “The Voice,” and others from this collection "are by general consent regarded as the peak of his poetic achievement". In a recent biography on Hardy, Claire Tomalin argues that Hardy became a truly great English poet after the death of his first wife, Emma, beginning with these elegies, which she describes as among "the finest and strangest celebrations of the dead in English poetry."

Wood and Stone (1915), the first novel by John Cowper Powys, who was a contemporary of Lawrence, was "Dedicated with devoted admiration to the greatest poet and Novelist of our age Thomas Hardy". Powys's later novel Maiden Castle (1936) is set in Dorchester, Hardy's Casterbridge, and was intended by Powys to be a "rival" to Hardy's The Mayor of Casterbridge. Maiden Castle is the last of Powys's so-called Wessex novels, Wolf Solent (1929), A Glastonbury Romance (1932), and Weymouth Sands (1934), which are set in Somerset and Dorset.

A number of notable English composers, including Gerald Finzi, Benjamin Britten, and Gustav Holst, set poems by Hardy to music. Holst also wrote the orchestral tone poem Egdon Heath: A Homage to Thomas Hardy in 1927.

Hardy became ill with pleurisy in December 1927 and died at Max Gate just after 9 pm on 11 January 1928, having dictated his final poem to his wife on his deathbed; the cause of death was cited, on his death certificate, as "cardiac syncope", with "old age" given as a contributory factor. His funeral was on 16 January at Westminster Abbey, and it proved a controversial occasion because Hardy had wished for his body to be interred at Stinsford in the same grave as his first wife, Emma. His family and friends concurred; however, his executor, Sir Sydney Carlyle Cockerell, insisted that he be placed in the abbey's famous Poets' Corner. A compromise was reached whereby his heart was buried at Stinsford with Emma, and his ashes in Poets' Corner. Hardy's estate at death was valued at £95,418 (£5276015 in 2015 sterling).

Hardy's work was admired by many younger Writers, including D. H. Lawrence, John Cowper Powys, and Virginia Woolf. In his autobiography Goodbye to All That (1929), Robert Graves recalls meeting Hardy in Dorset in the early 1920s and how Hardy received him and his new wife warmly, and was encouraging about his work.

Hardy was clearly the starting point for the character of the Novelist Edward Driffield in W. Somerset Maugham's novel Cakes and Ale (1930). Thomas Hardy's works also feature prominently in the American Playwright Christopher Durang's The Marriage of Bette and Boo (1985), in which a graduate thesis analysing Tess of the d'Urbervilles is interspersed with analysis of Matt's family's neuroses.

D. H. Lawrence's Study of Thomas Hardy (1936) indicates the importance of Hardy for him, even though this work is a platform for Lawrence's own developing philosophy rather than a more standard literary study. The influence of Hardy's treatment of character, and Lawrence's own response to the central metaphysic behind many of Hardy's novels, helped significantly in the development of The Rainbow (1915) and Women in Love (1920).

Although his poems were initially not as well received as his novels had been, Hardy is now recognised as one of the greatest twentieth-century poets, and his verse has had a profound influence on later Writers, including Robert Frost, W. H. Auden, Dylan Thomas, and, most notably Philip Larkin. Larkin included twenty-seven poems by Hardy compared with only nine by T. S. Eliot in his edition of the Oxford Book of Twentieth Century English Verse in 1973. There were also fewer poems by W. B. Yeats.