Hess was born in Bonn, which was under French rule at the time. In his French-language birth certificate, his name is given as "Moises"; he was named after his maternal grandfather. Hess received a Jewish religious education from his grandfather, and later studied philosophy at the University of Bonn, but never graduated.

He was an early proponent of socialism, and a precursor to what would later be called Zionism. His works included Holy History of Mankind (1837), European Triarchy (1841) and Rome and Jerusalem (1862). He married a Catholic working-class woman, Sibylle Pesch, in defiance of bourgeois values. In socialist literature the idea was propagated that she was a prostitute 'redeemed' by Hess, but that notion has been refuted by Hess' biographer Silberner.

As correspondent for the "Rheinische Zeitung", a radical newspaper founded by liberal Rhenish businessmen (and for which Karl Marx also worked), he lived in Paris, fleeing to Belgium and Switzerland temporarily following the suppression of the 1848 commune and again during the Franco-Prussian war.

Hess originally advocated Jewish integration into the universalist socialist movement, and was a friend and collaborator of Karl Marx and Friedrich Engels. Hess converted Engels to Communism, and introduced Marx to social and economic problems. He played an important role in transforming Hegelian dialectical idealism theory of history to the dialectical materialism of Marxism, by conceiving of man as the initiator of history through his active consciousness. Hess was probably responsible for several "Marxian" slogans and ideas, including religion as the "opiate of the people." Hess became reluctant to base all history on economic causes and class struggle, and he came to see the struggle of races, or nationalities, as the prime factor of past history.

After the failure of the revolutionary war in summer 1849 in Palatinate and Baden and the fall of Rastatt, the last refuge of the revolutionaries, the artillery commander Fritz Anneke (whose adjunct officer was Carl Schurz) and his wife Mathilde Franziska Anneke, who were old friends from Hess' Cologne days, close to Hess' friend Andreas Gottschalk and leading personalities of the Communist Club in Cologne, found temporary refuge in his home in Strasbourg before moving on to the United States.

From 1861 to 1863 he lived in Germany, where he became acquainted with the rising tide of German Anti-Semitism. It was then that he reverted to his Jewish name Moses in protest against assimilationism. In this period he apparently returned to religion in the form of Spinoza's pantheism, which he somehow did not find incompatible with orthodoxy. He published Rome and Jerusalem in 1861. Hess interprets history as a circle of race and class struggles. He contemplated the rise of Italian nationalism and the German reaction to it, and from this he arrived at the idea of Jewish national revival, and at his prescient understanding that the Germans would not be tolerant of the national aspirations of others and would be particularly intolerant of the Jews. His book calls for the establishment of a Jewish socialist commonwealth in Palestine, in line with the emerging national movements in Europe and as the only way to respond to antisemitism and assert Jewish identity in the modern world.

Hess's Rome and Jerusalem. The Last National Question went unnoticed in his time, along with the rest of his writings. Most German Jews were bent on assimilation and did not heed Hess' unfashionable warnings. His work did not stimulate any political activity or discussion. Hess's contribution, like Leon Pinsker's Autoemancipation, became important only in retrospect, as the Zionist movement began to crystallize and to generate an audience in the late nineteenth century. When Theodor Herzl first read Rome and Jerusalem he wrote about Hess that "since Spinoza jewry had no bigger thinker than this forgotten Moses Hess" and that he would not have written Der Judenstaat (The Jewish State) if he had known Rome and Jerusalem beforehand. Vladimir Ze'ev Jabotinsky honored Hess in The Jewish Legion in World War as one of those people that made the Balfour declaration possible, together with Herzl, Rothschild and Pinsker.

Hess died in Paris in 1875. As he requested, he was buried in the Jewish cemetery of Cologne. In 1961 he was re-interred in the Kinneret Cemetery in Israel along with other Socialist-Zionists such as Nachman Syrkin, Ber Borochov, and Berl Katznelson. The moshav Kfar Hess was named in his honour.