Born in Mohrungen (Morąg) in the Kingdom of Prussia, grew up in a poor household, educating himself from his father's Bible and songbook. In 1762, an introspective youth of seventeen, he enrolled at the local University of Königsberg, where he became a student of Immanuel Kant. At the same time, Herder became an intellectual protégé of Johann Georg Hamann, a patriotic Francophobe and intensely subjective thinker who championed the emotions against reason. His choice of Hamann over such luminaries as Immanuel Kant was significant, as this odd figure, a needy hypochondriac, delved back into the German mysticism of Jacob Böhme and others, pronouncing obscure and oracular dicta that brought him fame as the "Magus of the North". Hamann's disjointed effusions generally carried subtitles such as Hierophantic Letters or A Rhapsody in Cabbalistic Prose.

Hamann's influence led Herder to confess to his wife later in life that "I have too little reason and too much idiosyncrasy", yet Herder can justly claim to have founded a new school of German political thought. Although himself an unsociable person, Herder influenced his contemporaries greatly. One friend wrote to him in 1785, hailing his works as "inspired by God." A varied field of theorists were later to find inspiration in Herder's tantalisingly incomplete ideas.

In 1764, now a clergyman, Herder went to Riga to teach. It was during this period that he produced his first major works, which were literary criticism.

In 1769 Herder traveled by ship to the French port of Nantes and continued on to Paris. This resulted in both an account of his travels as well as a shift of his own self-conception as an author.

By 1770 Herder went to Strasbourg, where he met the young Goethe. This event proved to be a key juncture in the history of German literature, as Goethe was inspired by Herder's literary criticism to develop his own style. This can be seen as the beginning of the "Sturm und Drang" movement. In 1771 Herder took a position as head pastor and court preacher at Bückeburg under Count Wilhelm von Schaumburg-Lippe.

By the mid-1770s, Goethe was a well-known author, and used his influence at the court of Weimar to secure Herder a position as General Superintendent. Herder moved there in 1776, where his outlook shifted again towards classicism.

Towards the end of his career, Herder endorsed the French Revolution, which earned him the enmity of many of his colleagues. At the same time, he and Goethe experienced a personal split. Herder was ennobled by the Elector-Prince of Bavaria late in life, which added the prefix "von" to his last name. He died in Weimar in 1803.

In 1772 Herder published Treatise on the Origin of Language and went further in this promotion of language than his earlier injunction to "spew out the ugly slime of the Seine. Speak German, O You German". Herder now had established the foundations of comparative philology within the new currents of political outlook.

Throughout this period, he continued to elaborate his own unique theory of aesthetics in works such as the above, while Goethe produced works like The Sorrows of Young Werther – the Sturm und Drang movement was born.

Herder wrote an important essay on Shakespeare and Auszug aus einem Briefwechsel über Ossian und die Lieder alter Völker (Extract from a correspondence about Ossian and the Songs of Ancient Peoples) published in 1773 in a manifesto along with contributions by Goethe and Justus Möser. Herder wrote that "A poet is the creator of the nation around him, he gives them a world to see and has their souls in his hand to lead them to that world." To him such poetry had its greatest purity and power in nations before they became civilised, as shown in the Old Testament, the Edda, and Homer, and he tried to find such virtues in ancient German folk songs and Norse poetry and mythology.