Middleton was born in London and baptized on 18 April 1580. He was the son of a bricklayer who had raised himself to the status of a gentleman and who, interestingly, owned property adjoining the Curtain theatre in Shoreditch. Middleton was just five when his father died and his mother's subsequent remarriage dissolved into a fifteen year battle over the inheritance of Thomas and his younger sister: an experience which must surely have informed and perhaps even incited his repeated satirizing of the legal profession.

Middleton attended Queen’s College, Oxford, matriculating in 1598, although he did not graduate. Before he left Oxford (sometime in 1600 or 1601), he wrote and published three long poems in popular Elizabethan styles; none appears to have been especially successful, and one, his book of satires, ran afoul of the Anglican Church's ban on verse satire and was burned. Nevertheless, his literary career was launched.

In the early 1600s, Middleton made a living writing topical pamphlets, including one — Penniless Parliament of Threadbare Poets — that enjoyed many reprintings as well as becoming the subject of a Parliamentary inquiry. At the same time, records in the diary of Philip Henslowe show that Middleton was writing for the Admiral's Men. Unlike Shakespeare, Middleton remained a free agent, able to write for whichever company hired him. His early dramatic career was marked by controversy. His friendship with Thomas Dekker brought him into conflict with Ben Jonson and George Chapman in the War of the Theatres. The grudge with Jonson continued as late as 1626, when Jonson's play The Staple of News indulges a slur on Middleton's great success, A Game at Chess. It has been argued that Middleton's Inner Temple Masque (1619) sneers at Jonson (then absent in Scotland) as a "silenced bricklayer."

In 1603, Middleton married. The same year, an outbreak of plague forced the closing of the theatres in London, and James I assumed the English throne. These events marked the beginning of Middleton's greatest period as a playwright. Having passed the time during the plague composing prose pamphlets (including a continuation of Thomas Nashe's Pierce Penniless), he returned to drama with great energy, producing close to a score of plays for several companies and in several genres, most notably city comedy and revenge tragedy. He continued his collaborations with Dekker, and the two produced The Roaring Girl, a biography of contemporary thief Mary Frith.

In the 1610s, Middleton began his fruitful collaboration with the actor William Rowley, producing Wit at Several Weapons and A Fair Quarrel; working alone he produced his comic masterpiece, A Chaste Maid in Cheapside, in 1613. His own plays from this decade reveal a somewhat mellowed temper; certainly there is no comedy among them with the satiric depth of Michaelmas Term and no tragedy as bloodthirsty as The Revenger's Tragedy. Middleton was also branching out into other dramatic endeavors; he was apparently called on to help revise Macbeth and Measure for Measure, and at the same time he was increasingly involved with civic pageants. This last connection was made official when, in 1620, he was appointed City Chronologer of the City of London. He held this post until his death in 1627, at which time it was passed to Jonson.

Middleton's official duties did not interrupt his dramatic writings; the 1620s saw the production of his and Rowley's tragedy The Changeling, and several tragicomedies. In 1624, he reached a pinnacle of notoriety when his dramatic allegory A Game at Chess was staged by the King's Men. The play used the conceit of a chess game to present and satirize the recent intrigues surrounding the Spanish Match. Though Middleton's approach was strongly patriotic, the Privy Council shut down the play after nine performances on the complaint of the Spanish ambassador. Middleton faced an unknown, but likely frightening, degree of punishment. Since no play later than A Game at Chess is recorded, it has been hypothesized that his punishment included a ban on writing for the stage.

Middleton died at his home in Newington Butts in 1627.

Middleton wrote in many genres, including tragedy, history and city comedy. His best-known plays are the tragedies The Changeling (written with William Rowley) and Women Beware Women, and the cynically satirical city comedy A Chaste Maid in Cheapside. Although earlier editions of The Revenger's Tragedy attribute the play to Cyril Tourneur, or refused to arbitrate between Middleton and Tourneur, since the massive and widely acclaimed statistical studies by David Lake and MacDonald P. Jackson, Middleton's authorship has not been seriously contested, and no scholar has mounted a new defense of the discredited Tourneur attribution. The Oxford Middleton and its companion piece, Thomas Middleton and Early Modern Textual Culture, offer the most extensive and decisive evidence to date not only for Middleton's authorship of The Revenger's Tragedy, but also for his collaboration with Shakespeare on Timon of Athens and his adaptation and revision of Shakespeare's Macbeth and Measure for Measure.

However, the evidence for Middleton's supposed authorship of act 1.2 is extraordinarily weak, for example, the presence of words such as 'has', 'whilst' and 'between', which are found throughout Shakespeare's later plays such as "Anthony and Cleopatra". Their presence is due to the rapid change in the English language between 1580 - 1610. The claims for Middleton's hand in the plays of Shakespeare probably have more to do with the desire to enhance the importance (i.e., sales) of editions of Middleton's plays than with any real connection between Middleton and "Measure for Measure".

Middleton's work is diverse even by the standards of his age. He did not have the kind of official relationship with a particular company that Shakespeare or Fletcher had; instead, he appears to have written on a freelance basis for any number of companies. Particularly in the early years of his career, this freedom led to a great diversity in his output, which ranges from the "snarling" satire of Michaelmas Term (performed by the Children of Paul's) to the bleak intrigues of The Revenger's Tragedy (performed by the King's Men), assuming he is the author of the latter. Also contributing to the variety of the works is the scope of Middleton's career. If his early work was informed by the flourishing of satire in the late-Elizabethan period.

His maturity was influenced by the ascendancy of Fletcherian tragicomedy. If many of these plays have been judged less compelling than his earlier work, his later work, in which satiric fury is tempered and broadened, also includes three of his acknowledged masterpieces. A Chaste Maid in Cheapside, produced by the Lady Elizabeth's Men, skillfully combines Middleton's typically cutting presentation of London life with an expansive view of the power of love to effect reconciliation. The Changeling, a late tragedy, returns Middleton to an Italianate setting like that in The Revenger's Tragedy; here, however, the central characters are more fully drawn and more compelling as individuals, again, assuming he wrote The Revenger's Tragedy. Similar changes may be seen in Women Beware Women.

Middleton's plays are characterized by their cynicism about the human race, a cynicism that is often very funny. True heroes are a rarity in Middleton; in his plays, almost every character is selfish, greedy, and self-absorbed. This quality is best observed in the A Chaste Maid in Cheapside, a panoramic view of a London populated entirely by sinners, in which no social rank goes unsatirized. It can also be seen in the tragedies Women Beware Women and The Revenger's Tragedy, in which enjoyably amoral Italian courtiers endlessly plot against each other, resulting in a climactic bloodbath. When Middleton does portray good people, the characters have very small roles, and are flawless to perfection. Thanks to a theological pamphlet attributed to him, Middleton is thought by some to have been a strong believer in Calvinism, among the dominant strains in the theology of the English church of his time, which rigidly divides humanity into the damned and the elect, which focuses on human sinfulness and inadequacy more than in the other denominations of Christianity.

Middleton's work has long been praised by literary critics, among them Algernon Charles Swinburne and T.S. Eliot. The latter thought Middleton was second only to Shakespeare. In his own time, he was thought talented enough to revise Shakespeare's Macbeth and Measure for Measure.

Middleton's plays have been staged throughout the twentieth century and into the twenty-first, each decade offering more productions than the last. Even less familiar works have been staged: A Fair Quarrel was performed at the National Theatre, and The Old Law has been performed by the Royal Shakespeare Company. The Changeling has been adapted for film several times, and the tragedy Women Beware Women remains a stage favourite. The Revenger's Tragedy was adapted into Alex Cox's film Revengers Tragedy, the opening credits of which attribute the play's authorship to Middleton.