He was born in Camden, Ohio, the third child of Erwin M. Anderson and Emma S. Anderson. After his father's business failed, though, they were forced to move frequently, finally settling down at Clyde, Ohio in 1884. The family difficulties led the father to begin heavily drinking, while the mother died in 1895. Partly because of this, Anderson was eager to take on odd jobs, some of which was to help his family.
He moved to Chicago, Illinois near his brother Clyde's home. He worked as a manual laborer until near the turn of the century, when he enrolled in the US Army and participated in Cuba during the Spanish-American War. After the war, he worked with his brother at a publishing company in Springfield, Ohio. In 1900, Anderson attended the Wittenburg Academy. Eventually, he was secured the job of copywriter, back at Chicago, where he was highly successful. In 1904, he married Cornelia Lane, the daughter of a wealthy Ohio family.
He fathered three children, and moved to Cleveland, Ohio where me managed a mail-order business and paint manufacturing firms. However, in November 1912, he went missing for a few days, but reappeared four days later, after having a mental breakdown. He described this as "escaping from his materialistic existence", which garnered praise from many other writers, who used his "courage" as an example. He moved back to Chicago, working again for the publishing and advertisement company.
In 1914, he divorced Cornelia Lane and married Tennessee Mitchell. That same year, his first novel, Windy McPherson's Son, was published. Three years later, his second major work, Marching Men, was published. However, he is probably most famous for his collection of works, which he began in 1915, known as Winesburg, Ohio. His themes are compared to those of T.S. Eliot and many other such modernists. Although his short stories, especially those mentioned, were very successful, he felt the need to write novels. In 1920, he published Poor White, a rather successful novel. He wrote various novels, before divorcing Mitchell in 1922 and marrying Elizabeth Prall, two years later.
However, this marriage failed, and Anderson married Eleanor Copenhaver in the late 1920s. They traveled and studied often together. In the 1930s, he published Death in the Woods, Puzzled America (a book of essays), and Kit Brandon, which was published in 1936. Although he was much less influential in this final writing period, many of Anderson's more significant lines of prose were present in these works, which were generally considered sub-par (compared to his others). He died of peritonitis while traveling to Panama, as one of the most influential modern short story and novel writers.