The family of Hazlitt's father were Irish Protestants who moved from the county of Antrim to Tipperary in the early 18th century. Also named william Hazlitt, Hazlitt's father attended the University of Glasgow (where he was taught by Adam Smith), receiving a master's degree in 1760. Not entirely satisfied with his Presbyterian faith, he became a Unitarian minister in England. In 1764 he became pastor at Wisbech in Cambridgeshire, where in 1766 he married Grace Loftus, daughter of a recently deceased ironmonger. Of their many children, only three survived infancy. The first of these, John (later known as a portrait painter), was born in 1767 at Marshfield in Gloucestershire, where the Reverend william Hazlitt had accepted a new pastorate after his marriage. In 1770, the elder Hazlitt accepted yet another position and moved with his family to Maidstone, Kent, where his first and only surviving daughter, Margaret (usually known as "Peggy"), was born that same year.

On the way home, crossing the Swiss Alps, Hazlitt particularly desired to see the town of Vevey, the scene of Rousseau's 1761 novel La Nouvelle Héloïse, a love story that he associated with his disappointed love for Sarah Walker. He was so enchanted with the region even apart from its personal and literary associations that he remained there with his wife for three months, renting a floor of a farmhouse named "Gelamont" outside of town, where "every thing was perfectly clean and commodious". The place was for the most part an oasis of tranquility for Hazlitt. As he reported:

William, the youngest of the surviving Hazlitt children, was born in Mitre Lane, Maidstone, in 1778. In 1780, when he was two, his family began a nomadic lifestyle that was to last several years. From Maidstone his father took them to Bandon, County Cork, Ireland; and from Bandon in 1783 to the United States, where the elder Hazlitt preached, lectured, and sought a ministerial call to a liberal congregation. His efforts to obtain a post did not meet with success, although he did exert a certain influence on the founding of the first Unitarian church in Boston. In 1786–87 the family returned to England and settled in Wem, in Shropshire. Hazlitt would remember little of his years in America, save the taste of barberries.

Hazlitt was educated at home and at a local school. At age 13 he had the satisfaction of seeing his writing appear in print for the first time, when the Shrewsbury Chronicle published his letter (July 1791) condemning the riots in Birmingham over Joseph Priestley's support for the French Revolution. In 1793 his father sent him to a Unitarian seminary on what was then the outskirts of London, the New College at Hackney (commonly referred to as Hackney College). The schooling he received there, though relatively brief, approximately two years, made a deep and abiding impression on Hazlitt.

Returning home, around 1795, his thoughts were directed into more secular channels, encompassing not only politics but, increasingly, modern philosophy, which he had begun to read with fascination at Hackney. In September 1794, he had met william Godwin, the reformist thinker whose recently published Political Justice had taken English intellectual circles by storm. Hazlitt was never to feel entirely in sympathy with Godwin's philosophy, but it gave him much food for thought. He spent much of his time at home in an intensive study of English, Scottish, and Irish thinkers like John Locke, David Hartley, George Berkeley, and David Hume, together with French thinkers like Claude Adrien Helvétius, Étienne Bonnot de Condillac, the Marquis de Condorcet, and Baron d'Holbach. From this point onwards, Hazlitt's goal was to become a Philosopher. His intense studies focused on man as a social and political animal, and, in particular, on the philosophy of mind, a discipline that would later be called psychology.

Around 1796, Hazlitt found new inspiration and encouragement from Joseph Fawcett, a retired clergyman and prominent reformer, whose enormous breadth of taste left the young thinker awestruck. From Fawcett, in the words of biographer Ralph Wardle, he imbibed a love for "good fiction and impassioned writing", Fawcett being "a man of keen intelligence who did not scorn the products of the imagination or apologize for his tastes". With him, Hazlitt not only discussed the radical thinkers of their day, but ranged comprehensively over all kinds of literature, from John Milton's Paradise Lost to Laurence Sterne's Tristram Shandy. This background is important for understanding the breadth and depth of Hazlitt's own taste in his later critical writings.

Hazlitt also contributed three letters to william Cobbett's Weekly Political Register at this time, all scathing critiques of Thomas Malthus's Essay on the Principle of Population (1798 and later editions). Here he replaced the dense, abstruse manner of his philosophical work with the trenchant prose style that was to be the hallmark of his later essays. Hazlitt's philippic, dismissing Malthus's argument on population limits as sycophantic rhetoric to flatter the rich, since large swathes of uncultivated land lay all round England, has been hailed as "the most substantial, comprehensive, and brilliant of the Romantic ripostes to Malthus". Also in 1807 Hazlitt undertook a compilation of parliamentary speeches, published that year as The Eloquence of the British Senate. In the prefaces to the speeches, he began to show a skill he would later develop to perfection, the art of the pithy character Sketch. He was able to find more work as a portrait Painter as well.

Later in 1802, Hazlitt was commissioned to travel to Paris and copy several works of the Old Masters hanging in the Louvre. This was one of the great opportunities of his life. Over a period of three months, he spent long hours rapturously studying the gallery's collections, and hard thinking and close analysis would later inform a considerable body of his art criticism. He also happened to catch sight of Napoleon, a man he idolised as the rescuer of the Common man from the oppression of royal "Legitimacy".

On 22 March 1803, at a London dinner party held by william Godwin, Hazlitt met Charles Lamb and his sister Mary. A mutual sympathy sprang up immediately between william and Charles, and they became fast friends. Their friendship, though sometimes strained by Hazlitt's difficult ways, lasted until the end of Hazlitt's life. He was fond of Mary as well, and—ironically in view of her intermittent fits of insanity—he considered her the most reasonable woman he had ever met, no small compliment coming from a man whose view of women at times took a misogynistic turn. Hazlitt frequented the society of the Lambs for the next several years, from 1806 often attending their famous "Wednesdays" and later "Thursdays" literary salons.

With few commissions for painting, Hazlitt seized the opportunity to ready for publication his philosophical treatise, which, according to his son, he had completed by 1803. Godwin intervened to help him find a publisher, and the work, An Essay on the Principles of Human Action: Being an Argument in favour of the Natural Disinterestedness of the Human Mind, was printed in a limited edition of 250 copies by Joseph Johnson on 19 July 1805. This gained him little notice as an original thinker, and no money. Although the treatise he valued above anything else he wrote was never, at least in his own lifetime, recognised for what he believed was its true worth, it brought him attention as one who had a grasp of contemporary philosophy. He therefore was commissioned to abridge and write a preface to a now obscure work of mental philosophy, The Light of Nature Pursued by Abraham Tucker (originally published in seven volumes from 1765 to 1777), which appeared in 1807 and may have had some influence on his own later thinking.

There was an article on The Tatler itself. Mostly his political commentary was reserved for other vehicles, but included was a "Character of the Late Mr. Pitt", a scathing characterisation of the recently deceased former Prime Minister. Written in 1806, Hazlitt liked it well enough to have already had it printed twice before (and it would appear again in a collection of political essays in 1819).

He had already devoted years to pondering much of the thinking espoused by several of these figures. Thoroughly immersed in the Malthusian controversy, for Example, Hazlitt had published A Reply to the Essay on Population as early as 1807, and the essay on Malthus is a distillation of Hazlitt's earlier criticisms.

In 1808, Hazlitt married Sarah Stoddart, a friend of Mary Lamb and sister of John Stoddart, a Journalist who became Editor of The Times newspaper in 1814. Shortly before the wedding, John Stoddart established a trust into which he began paying £100 per year, for the benefit of Hazlitt and his wife—this was a very generous gesture, but Hazlitt detested being supported by his brother-in-law, whose political beliefs he despised. This union was not a love match, and incompatibilities would later drive the couple apart; yet, for a while, it seemed to work well enough, and their initial behavior was both playful and affectionate. Miss Stoddart, an unconventional woman, accepted Hazlitt and tolerated his eccentricities just as he, with his own somewhat offbeat individualism, accepted her. Together they made an agreeable social foursome with the Lambs, who visited them when they set up a household in Winterslow, a village a few miles from Salisbury, Wiltshire, in southern England. The couple had three sons over the next few years, Only one of their children, william, born in 1811, survived infancy. (He in turn fathered william Carew Hazlitt.)

As the head of a family, Hazlitt was now more than ever in need of money. Through william Godwin, with whom he was frequently in touch, he obtained a commission to write an English grammar, published on 11 November 1809 as A New and Improved Grammar of the English Tongue. Another project that came his way was the work that was published as Memoirs of the Late Thomas Holcroft, a compilation of autobiographical writing by the recently deceased Playwright, Novelist, and radical political Activist, together with additional material by Hazlitt himself. Though completed in 1810, this work did not see the light of day until 1816, and so provided no financial gain to satisfy the needs of a young husband and father. Hazlitt in the meantime had not forsaken his painterly ambitions. His environs at Winterslow afforded him opportunities for landscape painting, and he spent considerable time in London procuring commissions for portraits.

In October 1812, Hazlitt was hired by The Morning Chronicle as a parliamentary reporter. Soon he met John Hunt, publisher of The Examiner, and his younger brother Leigh Hunt, the poet and Essayist, who edited the weekly paper. Hazlitt admired both as champions of liberty, and befriended especially the younger Hunt, who found work for him. He began to contribute Miscellaneous essays to The Examiner in 1813, and the scope of his work for the Chronicle was expanded to include drama criticism, literary criticism, and political essays. In 1814 The Champion was added to the list of periodicals that accepted Hazlitt's by-now profuse output of literary and political criticism. A critique of Joshua Reynolds' theories about art appeared there as well, one of Hazlitt's major forays into art criticism.

His circle of friends expanded, though he never seems to have been particularly close with any but the Lambs and to an extent Leigh Hunt and the Painter Benjamin Robert Haydon. His low tolerance for any who, he thought, had abandoned the cause of liberty, along with his frequent outspokenness, even tactlessness, in social situations made it difficult for many to feel close to him, and at times he tried the patience of even Charles Lamb. In The Examiner in late 1814, Hazlitt was the first to provide a critique of Wordsworth's poem The Excursion (Hazlitt's review appeared weeks before Francis Jeffrey's notorious dismissal of the poem with the words "This will never do"). He lavished extreme praise on the poet—and equally extreme censure. While praising the poem's sublimity and intellectual power, he took to task the intrusive egotism of its author. Clothing landscape and incident with the poet's personal thoughts and feelings suited this new sort of poetry very well; but his abstract philosophical musing too often steered the poem into didacticism, a leaden counterweight to its more imaginative flights. Wordsworth, who seems to have been unable to tolerate anything less than unqualified praise, was enraged, and relations between the two became cooler than ever.

On 18 June 1815, Napoleon was defeated at Waterloo. Having idolised Napoleon for years, Hazlitt took it as a personal blow. The event seemed to him to mark the end of hope for the Common man against the oppression of "legitimate" monarchy. Profoundly depressed, he took up heavy drinking and was reported to have walked around unshaven and unwashed for weeks. He idolised and spoiled his son, william Jr., but in most respects his household grew increasingly disordered over the following year: his marriage deteriorated, and he spent more and more time away from home. His part-time work as a drama critic provided him with an excuse to spend his evenings at the theatre. Afterwards he would then tarry with those friends who could tolerate his irascibility, the number of whom dwindled as a result of his occasionally outrageous behaviour.

His lecturing in particular had drawn to Hazlitt a small group of admirers. Best known today is the poet John Keats, who not only attended the lectures but became Hazlitt's friend in this period. The two met in November 1816 through their mutual friend, the Painter Benjamin Robert Haydon, and were last seen together in May 1820 at a dinner given by Haydon. In those few years before the poet's untimely death, the two read and admired each other's work, and Keats, as a younger man seeking guidance, solicited Hazlitt's advice on a course of reading and direction in his career. Some of Keats's writing, particularly his key idea of "negative capability", was influenced by the concept of "disinterested sympathy" he discovered in Hazlitt, whose work the poet devoured. Hazlitt, on his part, later wrote that of all the younger generation of poets, Keats showed the most promise, and he became Keats's first anthologist when he included several of Keats's poems in a collection of British poetry he compiled in 1824, three years after Keats's death.

In the meantime, Hazlitt's marriage continued its downward spiral; he was writing furiously for several periodicals to make ends meet; waiting so far in vain for the collection The Round Table to be issued as a book (which it finally was in February 1817); suffering bouts of illness; and making enemies by his venomous political diatribes. He found relief by a change of course, shifting the focus of his analysis from the acting of Shakespeare's plays to the substance of the works themselves. The result was a collection of critical essays entitled Characters of Shakespear's Plays (1817).

Nonetheless Hazlitt's satisfaction at the relief he gained from his financial woes was supplemented by the positive response his return to the lecture hall received. In early 1818 he delivered a series of talks on "the English Poets", from Chaucer to his own time. Though somewhat uneven in quality, his lectures were ultimately judged a success. In making arrangements for the lectures, he had met Peter George Patmore, Assistant Secretary of the Surrey Institution where the lectures were presented. Patmore soon became a friend as well as Hazlitt's confidant in the most troubled period of the latter's life.

His thoughts drifted to gloom and misanthropy. His mood was not improved by the fact that by now there was no pretence of keeping up appearances: his marriage had failed. Years earlier he had grown resigned to the lack of love between him and Sarah. He had been visiting prostitutes and displayed more idealised amorous inclinations toward a number of women whose names are lost to history. Now in 1819, he was unable to pay the rent on their rooms at 19 York Street and his family were evicted. That was the last straw for Sarah, who moved into rooms with their son and broke with Hazlitt for good, forcing him to find his own accommodation. He would sometimes see his son and even his wife, with whom he remained on speaking terms, but they were effectively separated.

In August 1820, a month after his father's death at 83, he rented a couple of rooms in 9 Southampton Buildings in London from a tailor named Micaiah Walker. Walker's 19-year-old daughter Sarah, who helped with the housekeeping, would bring the new lodger his breakfast. Immediately, Hazlitt became infatuated with Miss Walker, more than 22 years his junior. (Before much longer, this "infatuation" turned into a protracted obsession.) His brief conversations with Walker cheered him and alleviated the loneliness that he felt from his failed marriage and the recent death of his father. He dreamed of marrying her, but that would require a divorce from Sarah Hazlitt—no easy matter. Finally, his wife agreed to grant him a Scottish divorce, which would allow him to remarry (as he could not had he been divorced in England).

Not only do the "Table-Talk" essays frequently display "trenchant insights into human nature", they at times reflect on the vehicle of those insights and of the literary and art criticism that constitute some of the essays. "On Criticism" (1821) delves into the history and purposes of criticism itself; and "On Familiar Style" (1821 or 1822) reflexively explores at some length the principles behind its own composition, along with that of other essays of this kind by Hazlitt and some of his contemporaries, like Lamb and Cobbett.

Hazlitt's fascination with the extremes of human capability in any field led to his writing "The Fight" (published in the February 1822 New Monthly Magazine). This essay never appeared in the Table-Talk series or anywhere else in the author's lifetime. This direct, personal account of a prize fight, commingling refined literary allusions with popular slang, was controversial in its time as depicting too "low" a subject. Written at a dismal time in his life—Hazlitt's divorce was pending, and he was far from sure of being able to marry Sarah Walker—the article shows scarcely a trace of his agony. Not quite like any other essay by Hazlitt, it proved to be one of his most popular, was frequently reprinted after his death, and nearly two centuries later was judged to be "one of the most passionately written pieces of prose in the late Romantic period".

He also found relief, finally, from the Sarah Walker imbroglio. In 1823, Hazlitt had met Isabella Bridgwater (née Shaw), who married him in March or April 1824, of necessity in Scotland, as Hazlitt's divorce was not recognised in England. Little is known about this Scottish-born widow of the Chief Justice of Grenada, or about her interaction with Hazlitt. She may have been attracted to the idea of marrying a well-known author. For Hazlitt, she offered an escape from loneliness and to an extent from financial worries, as she possessed an independent income of £300 per annum. The arrangement seems to have had a strong element of convenience for both of them. Certainly Hazlitt nowhere in his writings suggests that this marriage was the love match he had been seeking, nor does he mention his new wife at all. In fact, after three and half years, tensions likely resulting from (as Stanley Jones put it) Hazlitt's "improvidence", his son's dislike of her, and neglect of his wife due to his obsessive absorption in preparing an immense biography of Napoleon, resulted in her abrupt departure, and they never lived together again.

On 1 September 1824, Hazlitt and his wife began a tour of the European continent, crossing the English Channel by steamboat from Brighton to Dieppe and proceeding from there by coach and sometimes on foot to Paris and Lyon, crossing the Alps in Savoy, then continuing through Italy to Florence and Rome, the most southerly point on their route. Crossing the Apennines, they travelled to Venice, Verona, and Milan, then into Switzerland to Vevey and Geneva. Finally they returned via Germany, the Netherlands, Belgium, and France again, arriving at Dover, England, on 16 October 1825.

As comfortable as Hazlitt was on settling in again to his home on Down Street in London in late 1825 (where he remained until about mid-1827), the reality of earning a living again stared him in the face. He continued to provide a stream of contributions to various periodicals, primarily The New Monthly Magazine. The topics continued to be his favourites, including critiques of the "new school of reformers", drama criticism, and reflections on manners and the tendencies of the human mind. He gathered previously published essays for the collection The Plain Speaker, writing a few new ones in the process. He also oversaw the publication in book form of his account of his recent Continental tour.

In August 1826, Hazlitt and his wife set out for Paris again, so he could research what he hoped would be his masterpiece, a biography of Napoleon, seeking "to counteract the prejudiced interpretations of Scott's biography". Hazlitt "had long been convinced that Napoleon was the greatest man of his era, the apostle of freedom, a born leader of men in the old heroic mould: he had thrilled to his triumphs over 'legitimacy' and suffered real anguish at his downfall".

On returning to London with his son in August 1827, Hazlitt was shocked to discover that his wife, still in Paris, was leaving him. He settled in modest lodgings on Half-Moon Street, and thereafter waged an unending battle against poverty, as he found himself forced to grind out a stream of mostly undistinguished articles for weeklies like The Atlas to generate desperately needed cash. Relatively little is known of Hazlitt's other activities in this period. He spent as much time, apparently, at Winterslow as he did in London. Some meditative essays emerged from this stay in his favourite country retreat, and he also made progress with his life of Napoleon. But he also found himself struggling against bouts of illness, nearly dying at Winterslow in December 1827. Two volumes—the first half—of the Napoleon biography appeared in 1828, only to have its publisher fail soon thereafter. This entailed even more financial difficulties for the author, and what little evidence we have of his activities at the time consists in large part of begging letters to publishers for advances of money.

In 1828, Hazlitt found work reviewing for the theatre again (for The Examiner). In playgoing he found one of his greatest consolations. One of his most notable essays, "The Free Admission", arose from this experience. As he explained there, attending the theatre was not merely a great solace in itself; the atmosphere was conducive to contemplating the past, not just memories of the plays themselves or his reviewing of past performances, but the course of his whole life. In words written within his last few months, the possessor of a free admission to the theatre, "ensconced in his favourite niche, looking from the 'loop-holes of retreat' in the second circle ... views the pageant of the world played before him; melts down years to moments; sees human life, like a gaudy Shadow, glance across the stage; and here tastes of all earth's bliss, the sweet without the bitter, the honey without the sting, and plucks ambrosial fruits and amaranthine flowers (placed by the enchantress Fancy within his reach,) without having to pay a tax for it at the time, or repenting of it afterwards."

After a brief stay on Bouverie Street in 1829, sharing lodgings with his son, Hazlitt moved into a small apartment at 6 Frith Street, Soho. He continued to turn out articles for The Atlas, The London Weekly Review, and now The Court Journal. Plagued more frequently by painful bouts of illness, he began to retreat within himself. Even at this time, however, he turned out a few notable essays, primarily for The New Monthly Magazine. Turning his suffering to advantage, he described the experience, with copious observations on the effects of illness and recovery on the mind, in "The Sick Chamber". In one of his last respites from pain, reflecting on his personal history, he wrote, "This is the time for reading. ... A cricket chirps on the hearth, and we are reminded of Christmas gambols long ago. ... A rose smells doubly sweet ... and we enjoy the idea of a journey and an inn the more for having been bed-rid. But a book is the secret and sure charm to bring all these implied associations to a focus. ... If the stage [alluding to his remarks in "The Free-Admission"] shows us the masks of men and the pageant of the world, books let us into their souls and lay open to us the secrets of our own. They are the first and last, the most home-felt, the most heart-felt of our enjoyments". At this time he was reading the novels of Edward Bulwer in hopes of reviewing them for The Edinburgh Review.

William Hazlitt was buried in the churchyard of St Anne's Church, Soho in London on 23 September 1830, with only his son william, Charles Lamb, P.G. Patmore, and possibly a few other friends in attendance.

Other editors of Hazlitt include Frank Carr (1889), D. Nichol Smith (1901), Jacob Zeitlin (1913), Will David Howe (1913), Arthur Beatty (1919?), Charles Calvert (1925?), A. J. Wyatt (1925), Charles Harold Gray (1926), G. E. Hollingworth (1926), Stanley Williams (1937?), R. W. Jepson (1940), Richard Wilson (1942), Catherine Macdonald Maclean (1949), william Archer and Robert Lowe (1958), John R. Nabholtz (1970), Christopher Salvesen (1972), and R. S. White (1996).

His works having fallen out of print, Hazlitt underwent a small decline, though in the late 1990s his reputation was reasserted by admirers and his works reprinted. Two major works then appeared,The Day-Star of Liberty: william Hazlitt's Radical Style by Tom Paulin in 1998 and Quarrel of the Age: The Life and Times of william Hazlitt by A. C. Grayling in 2000. Hazlitt's reputation has continued to rise, and now many contemporary thinkers, poets, and scholars consider him one of the greatest critics in the English language, and its finest Essayist.

The Jonathan Bate novel The Cure for Love (1998) was based indirectly on Hazlitt's life.

In 2003, following a lengthy appeal initiated by Ian Mayes together with A. C. Grayling, Hazlitt's gravestone was restored in St Anne's Churchyard, and unveiled by Michael Foot. A Hazlitt Society was then inaugurated. The society publishes an annual peer-reviewed journal called The Hazlitt Review.

The easy life he had spoken of to Northcote had largely vanished by the time that conversation was published about a year before his death. By then he was overwhelmed by the degradation of poverty, frequent bouts of physical as well as mental illness—depression caused by his failure to find true love and by his inability to bring to fruition his defence of the man he worshipped as a hero of liberty and fighter of despotism.

Roy Park has noted in particular Hazlitt's critique of excessive abstraction as a major flaw in the period’s dominant philosophy and poetry. ("Abstraction", in this case, could be that of religion or mysticism as well as science.) This is the reason, according to Hazlitt, why neither Coleridge, nor Wordsworth, nor Byron could write effective drama. More representative of the finer spirit of the age was poetry that turned inward, focusing on individual perceptions, projections of the poets' sensibilities. The greatest of this type of poetry was Wordsworth's, and that succeeded as far as any contemporary writing could.