Gustav Landauer was the second child of a Jewish shoe shop owner in Karlsruhe, Germany, where he went through school. He was educated in philosophy, German studies and art history at Heidelberg, Strasbourg, and Berlin. After breaking off his studies in 1893, he worked as a freelance journalist and public speaker.

His later works show the lasting influence of Johann Wolfgang von Goethe and Leo Tolstoy but he also felt attracted to the philosophy of Johann Gottlieb Fichte and the French mutualist anarchism of Pierre-Joseph Proudhon and the socialist anarchism theories of Mickhail Bakunin and especially the communist anarchism of Peter Kropotkin.

His second wife, Hedwig Lachmann, was an accomplished translator, and they worked together to translate various works into German, including those of British playwright Oscar Wilde, including The Picture of Dorian Gray, and the American poet Walt Whitman.

In the spring of 1889 in Berlin, Landauer met his sponsor and long-time friend, the author and philosopher Fritz Mauthner for the first time. In April 1891 he joined the Free Volksbühne Berlin and declared his support of the "Friedrichshagen Poet Circle" (Friedrichshagener Dichterkreis) for Naturalist literature.

In February 1892 Landauer became a member of the Association of Independent Socialists (Verein Unabhängiger Sozialisten) and of a group of publishers for their mouthpiece "Socialist Organ of the Independent Socialists" (Sozialistisches Organ der unabhängigen Sozialisten). In this paper he wrote a number of articles about art, but also critical remarks about political issues as well as on the economic views of Karl Marx and Eugen Dühring. Together with friends from the literature group "The Young" (Die Jungen), who also worked with the Association of Independent Socialists, he founded the "New Free Volksbühne" (Neue Freie Volksbühne).

At the end of 1892 Landauer married the seamstress Margarethe Leuschner.

In July 1893 the Association of Independent Socialists, in which Landauer had become the leading member of its anarchist wing, split up. In the same month he ended his cooperation with the magazine "Socialist" (Sozialist) of which the last issue appeared in January 1895.

At the "International Convention of Socialist Workers" of the II. Socialist International in August 1893 in Zurich, Landauer, as a delegate for the Berlin anarchists, stood for an "anarchist socialism". Against an anarchist minority the convention with 411 delegates from 20 countries passed a resolution in favour of participation in elections and political action in parliaments. The anarchists were excluded from the II. Socialist International.

Landauer was arrested for "incitement to civil disobedience" in October 1893, and sentenced to 2 months in prison. In December the sentence was extended to 9 months, which Landauer served in the prison of Sorau (today Żary).

After Landauer had been unable to establish a secure livelihood in Switzerland in 1895 he returned to Berlin where he lived very modestly in a circle of artists, literati, people from theatres and critics. Between 1895 and 1899 he published another magazine titled "Socialist-Anarchist Monthly" (Sozialist – Anarchistische Monatszeitschrift).

In 1899 Landauer met the poet and language teacher Hedwig Lachmann, who would later become his second wife. In September of that year they decided to stay together for a longer period in England, where Landauer became close friends with the Russian anarchist Peter Kropotkin. During this time Lachmann's and Landauer's daughter Gudula was born. In 1902 they returned to Berlin.
In 1903 Landauer divorced his first wife and married Hedwig Lachmann the same year. In 1906 their second daughter Brigitte was born.

From 1909 to 1915 Landauer published the magazine "The Socialist" (Der Sozialist) in Berlin, which was considered to be the mouthpiece of the "Socialist Federation" (Sozialistischer Bund) founded by Landauer in 1908. Among the first members were Erich Mühsam and Martin Buber. As a political organisation the federation remained unimportant. In these years Landauer himself wrote 115 contributions for the magazine concerning art, literature and philosophy but also contemporary politics. In this magazine he also published to a greater extent own translations of the French philosopher and theorist Pierre-Joseph Proudhon. Because of the tightening of censorship the magazine had to be closed down.

In 1914 Landauer would not let himself be carried away by the general enthusiasm for the German war effort. Instead, he fought against it from the very beginning from his anarchist and pacifist standpoint. Because of the increasing difficulties and poverty during the war, Landauer and his family moved from Berlin to Krumbach, near Ulm, in southwestern Germany. Here his wife died on 21 February, 1918 of pneumonia.

Right after the war and the start of the November Revolution (German Revolution) Kurt Eisner sent a letter to Landauer on 14 November 1918 inviting him to participate in the Revolution and the establishment of a soviet republic in Bavaria: "What I would like you to do is to contribute in the reconstruction of the souls by speech". After the assassination of Eisner by the right-wing extremist student Anton Graf von Arco auf Valley on 21 February 1919 the debates on the question of a council (soviet) system or a parliamentary system in the new Bavarian republic grew in intensity. When the soviet republic was proclaimed on 7 April 1919 against the elected government of Johannes Hoffmann, Landauer became Commissioner of Enlightenment and Public Instruction. The government of the first Soviet Republic of Bavaria (Erste Räterepublik des Freistaates Bayern) was initially dominated by independent socialists and pacifists like Ernst Toller (author and poet) or Silvio Gesell and anarchists like Erich Mühsam or Landauer. Landauer's first and only decree was to ban history lessons in Bavarian schools.

Three days after the soviet government had been taken over by functionaries of the KPD (Communist Party of Germany) around Eugen Leviné and Max Levien Gustav Landauer became disappointed with their policies and resigned from all his political posts on 16 April 1919. After the City of Munich was reconquered by the German army and Freikorps units, Gustav Landauer was arrested on 1 May 1919 and stoned to death by troopers one day later in Munich's Stadelheim Prison. After the Nazis seized power in Germany in 1933 they destroyed Landauer's grave, which had been erected in 1925, sent his remains to the Jewish congregation of Munich, charging them for the costs. Landauer was later put to rest at the Munich Waldfriedhof (Forest Cemetery).