Born at Benvie, Angus, Scotland, where his father was parish minister, Playfair was educated at home until the age of fourteen, when he entered the University of St Andrews. In 1766, when only eighteen, he was a candidate for the chair of mathematics in Marischal College (now part of the University of Aberdeen), and, although he was unsuccessful, his claims were admitted to be high.

Six years later he applied for the chair of natural philosophy in his own university, but again without success, and in 1773 he was offered and accepted the benefice of the united parishes of Liff and Benvie, vacant by the death of his father. Playfair continued, however, his mathematical and physical studies, and in 1782 he resigned his charge in order to become the tutor of Ferguson of Raith. By this arrangement, Playfair was able to be frequently in Edinburgh and to cultivate the literary and scientific society for which it was at that time specially distinguished. In particular, he attended the natural history course of John Walker. Through Nevil Maskelyne, whose acquaintance he had first made in the course of the celebrated Schiehallion experiments in 1774, he also gained access to the scientific circles of London. In 1785 when Dugald Stewart succeeded Ferguson in the Edinburgh chair of moral philosophy, Playfair succeeded the former in that of mathematics.

Interestingly, (Alhazen of the fame of Alhazen Plain on the moon) Ibn al-Haytham's work (800 years before Playfair) of simple substitution of Euclidean theory was the original from which John Playfair managed to 'formulate' his revolutionary theory of parallel postulates. In 1795 Playfair published an alternative, more stringent formulation of Euclid's parallel postulate, which is now called Playfair's axiom; though the axiom bears Playfair's name, he did not create it, but credited others, in particular William Ludlam (1718 - 1788), with the prior use of it.

In 1802, Playfair published his celebrated volume entitled Illustrations of the Huttonian Theory of the Earth. The influence exerted by James Hutton on the development of geology is thought to be largely due to its publication. In 1805 Playfair exchanged the chair of mathematics for that of natural philosophy in succession to John Robison, whom also he succeeded as general secretary to the Royal Society of Edinburgh. He took a prominent part, on the liberal side, in the ecclesiastical controversy that arose in connexion with Sir John Leslie's appointment to the post he had vacated, and published a satirical Letter (1806).

Playfair was an opponent of Gottfried Leibniz's vis viva principle, an early version of the conservation of energy. In 1808, he launched an attack on John Smeaton and William Hyde Wollaston's work championing the theory.

Although a wealthy man, Playfair was buried in an unmarked grave in Old Calton Cemetery, on Waterloo Place in Edinburgh. However, the monument to his memory, on Calton Hill, is visible from the spot.

John's brothers were architect James Playfair and engineer William Playfair. His son, William Henry Playfair (1790 - 1857) was an eminent architect in Scotland. His son designed the monument to his memory on Calton Hill.

A four-volume collected edition of Playfair's works, with a memoir by James G. Playfair, appeared at Edinburgh in 1822.

His writings include a number of essays contributed to the Edinburgh Review from 1804 onwards, various papers in the Phil. Trans. (including his earliest publication, " On the Arithmetic of Impossible Quantities," 1779, and an " Account of the Lithological Survey of Schehallion," 1811) and in the Transactions of the Royal Society of Edinburgh ("On the Causes which affect the Accuracy of Barometrical Measurements" etc.), also the articles "Aepinus" and "Physical Astronomy" and a "Dissertation on the Progress of Mathematical and Physical Science since the Revival of Learning in Europe" in the Encyclopædia Britannica (Supplement to fourth, fifth and sixth editions). His Elements of Geometry first appeared in 1795 and has passed through many editions; his Outlines of Natural Philosophy (2 vols., 1812 - 1816) consist of the propositions and formulae which were the basis of his class lectures. Playfair's contributions to pure mathematics were not considerable, his paper "On the Arithmetic of Impossible Quantities", that "On the Causes which affect the Accuracy of Barometrical Measurements" and his Elements of Geometry, all already referred to, being the most important. His lives of Matthew Stewart, Hutton, Robison, many of his reviews, and above all his "Dissertation" are of the utmost value.