Ranke was born in Wiehe, then part of the Electorate of Saxony. He was educated partly at home and partly in the Gymnasium of Schulpforta. His early years engendered a life long love of Ancient Greek and Latin and of the Lutheran Church. In 1814, Ranke entered the University of Leipzig, where his subjects were Classics and Lutheran theology. At Leipzig, Ranke became an expert in philology and translation of the ancient authors into German. As a student, Ranke's favorite authors were Thucydides, Livy, Dionysius of Halicarnassus, Johann Wolfgang von Goethe, Barthold Georg Niebuhr, Immanuel Kant, Johann Gottlieb Fichte, Friedrich Schelling, and Friedrich Schlegel. Ranke showed little interest in the work of modern history because of his dissatisfaction with what he regarded as history books that were merely a collection of facts lumped together by modern historians.

Between 1817 – 1825, Ranke worked as a Classics teacher at the Friedrichs Gymnasium in Frankfurt an der Oder. During this time, Ranke became interested in History in part because of his desire to be involved in the developing field of a more professionalized history and in part because of his desire to find the hand of God in the workings of history.

Beginning with his first book in 1824, the Geschichte der romanischen und germanischen Völker von 1494 bis 1514 (History of the Latin and Teutonic Peoples from 1494 to 1514), Ranke used an unusually wide variety of sources for a historian of the age, including "memoirs, diaries, personal and formal missives, government documents, diplomatic dispatches and first hand accounts of eye witnesses". In this sense he leaned on the traditions of Philology but emphasized mundane documents instead of old and exotic literature. Ranke began his book with the statement in the introduction that he would show the unity of the experiences of the "Teutonic" nations of Scandinavia, England and Germany and the "Latin" nations of Italy, Spain and France through the great "respirations" of theVölkerwanderung (great migration), the Crusades and colonisation that in Ranke's view bound all of the nations together to produce modern European civilization. Despite his opening statement, Ranke largely treated all of the nations under examination separately until the outbreak of the wars for the control of Italy starting in 1494. However, the book is best remembered for Ranke's comment that "To history has been assigned the office of judging the past, of instructing the present for the benefit of future ages. To such high offices this work does not aspire: It wants only to show what actually happened (wie es eigentlich gewesen)". Ranke's statement that history should embrace the principle of wie es eigentlich gewesen ist (meaning "how things actually were") is taken by many historians as their guiding principle. There has been much debate over the precise meaning of this phrase. Some have argued that adhering to the principle of wie es eigentlich gewesen ist means that the historian should only document facts without offering any interpretation of these facts. Following Georg Iggers, Peter Novick has argued that Ranke, who was more of a romantic and idealist than his American contemporaries understood, meant instead that the historian should discover the facts and find the essences behind them. Under this view, the word 'eigentlich' should be translated as 'essentially', the aim then being to "show what essentially happened". Ranke went on to write that the historian must seek the "Holy hieroglyph" that is God's hand in history, keeping an "eye for the universal" whilst taking "pleasure in the particular".

Following the success of Geschichte der romanischen und germanischen Völker von 1494 bis 1514, Ranke was given a position in the University of Berlin. At the university, Ranke became deeply involved in the dispute between the followers of the legal professor Friedrich Carl von Savigny who emphasized the varieties of different periods of history and the followers of the philosopher Georg Wilhelm Friedrich Hegel who saw history as the unfolding of a universal story. Ranke supported Savigny and criticized the Hegelian view of history as being a one-size-fits-all approach. Also during his time in Berlin, Ranke became the first historian to utilise the forty-seven volumes that comprised the diplomatic archives of Venice from the 16th and 17th centuries. Ranke came to prefer dealing with primary sources as opposed to secondary sources during this time. Ranke later wrote "I see the time approaching when we shall base modern history, no longer on the reports even of contemporary historians, except in so far as they were in the possession of personal and immediate knowledge of facts; and still less on work yet more remote from the source; but rather on the narratives of eyewitnesses, and on genuine and original documents".

Starting in 1831 at the behest of the Prussian government, Ranke founded and edited the Historisch-Politische Zeitschrift journal. Ranke, who was a conservative, used the journal to attack the ideas of Liberalism. In his 1833 article "The Great Powers" and his 1836 article "Dialogue on Politics" Ranke claimed that every state is given a special moral character from God and individuals should strive to best fulfill the "idea" of their state. Thus, in this way, Ranke urged his readers to stay loyal to the Prussian state and reject the ideas of the French Revolution, which Ranke claimed were meant for France, not Prussia.

Between 1834 – 1836 Ranke produced the multi-volume Die römischen Päpste, ihre kirche und ihr Staat im sechzehnten und siebzehnten Jahrhundert (History of the Popes, Their Church and Their State in the Sixteenth and Seventeenth Centuries). As a Protestant, Ranke was barred from viewing the Vatican archives in Rome, but on the basis of private papers in Rome and Venice, Ranke was able to explain the history of the papacy in the 16th century. In this book, Ranke coined the term the Counter Reformation and offered colourful portrayals of Pope Paul IV, Ignatius of Loyola, and Pope Pius V. The papacy denounced Ranke's book as anti-Catholic while many Protestants denounced Ranke's book as too neutral. However, Ranke has been generally praised by historians for placing the situation of the Roman Catholic Church in the context of the 16th century and for his treatment of the complex interaction of the political and religious issues in the 16th century. In particular, the British Roman Catholic historian Lord Acton defended Ranke's book as the most fair-minded, balanced and objective study ever written on the sixteenth century papacy. Ranke followed this book up with multi-volume Deutsche Geschichte im Zeitalter der Reformation (History of the Reformation in Germany) in 1845 – 1847. Ranke used the ninety-six volumes from ambassadors to Imperial Diet in Frankfurt to explain the Reformation in Germany as the result of both politics and religion.

In 1841, Ranke was appointed Royal Historiographer to the Prussian court. In 1849, Ranke published Neun Bücher preussicher Geschichte (transated as Memoirs of the House of Brandenburg and History of Prussia, during the Seventeenth and Eighteenth Centuries), in which he examined the fortunes of the Hohenzollern family and state from the Middle Ages to the reign of Frederick the Great. Many Prussian nationalists were offended by Ranke's portrayal of Prussia as a typical medium sized German state rather than as a great power.

In a series of lectures given before the future King Maximilian II of Bavaria, Ranke argued that "every age is next to God," by which he meant that every period of history is unique and must be understood in its own context. He argued that God gazes over history in its totality and finds all periods equal. Ranke rejected the teleological approach to history, by which each period is considered inferior to the period which follows. Thus, the Middle Ages were not inferior to the Renaissance, simply different. In Ranke's view, the historian had to understand a period on its own terms, and seek to find only the general ideas which animated every period of history. For Ranke, then, history was not to be an account of man's "progress" because, "After Plato, there can be no more Plato." For Ranke Christianity was morally most superior and could not be improved upon. Ultimately, "History is no criminal court."

In 1865, Ranke was ennobled, in 1882 appointed a Prussian Privy Councillor, and in 1885 given an honorary citizenship of Berlin. In 1884, he was appointed the first honorary member of the American Historical Association. After his retirement in 1871, Ranke continued to write on a variety of subjects relating to German history such as the French Revolutionary Wars, Albrecht von Wallenstein, Karl August von Hardenberg, and King Frederick William IV of Prussia. Starting in 1880, Ranke began a huge six volume work on World History, which began with ancient Egypt and the Israelites. By the time of Ranke's death in Berlin in 1886, at the age of 90, he had reached only the 12th century, though his assistants later used his notes to take the still incomplete series up to 1453.

At the core of his method, Ranke did not believe that general theories could cut across time and space. Instead, he made statements about the time using quotations from primary sources. He said, "My understanding of 'leading ideas' is simply that they are the dominant tendencies in each century. These tendencies, however, can only be described; they can not, in the last resort, be summed up in a concept." Ranke objected to philosophy of history, particularly as practiced by Hegel, claiming that Hegel ignored the role of human agency in history, which was too essential to be "characterized through only one idea or one word" or "circumscribed by a concept." This lack of emphasis on unifying theories or themes led some to denigrate his "mindless empiricism." In the 19th century, Ranke's work was very popular and his ideas about historical practise gradually became dominant in western historiography. However, he had critics among his contemporaries, including Karl Marx, a former Hegelian, who suggested that Ranke engaged in some of the practices he criticised in other historians. 

Nevertheless, Ranke's general method remains standard practice in published histories. It was also dominant within academia and historiography until the 1960s, when it was challenged by historians such as E.H. Carr and Fernand Braudel. Carr opposed Ranke's ideas of empiricism as naive, boring and outmoded, saying that historians did not merely report facts — they choose which facts they use. Braudel's approach was based on the histoire problème.