Steichen was born Éduard Jean Steichen in Bivange, Luxembourg, the son of Jean-Pierre and Marie Kemp Steichen. Jean-Pierre Steichen initially immigrated to the United States in 1880. Marie Steichen brought the infant Eduard along once Jean-Pierre had settled in Chicago, in 1881. The family, with the addition of Eduard's younger sister Lilian, moved to Milwaukee in 1889, when Steichen was 10.

In 1894, at the age of fifteen, Steichen began a four-year lithography apprenticeship with the American Fine Art Company of Milwaukee. After hours he would sketch and draw, and began to teach himself to paint. Having come across a camera shop near to his work, he visited frequently with curiosity until he persuaded himself to buy his first camera, a second hand Kodak box "detective" camera, in 1895. Steichen and his friends who were also interested in drawing and photography pooled together their funds, rented a small room in a Milwaukee office building, and began calling themselves the Milwaukee Art Students League. The group also hired Richard Lorenz and Robert Schade for occasional lectures.

Steichen was naturalized as a U.S. citizen in 1900, and signed the naturalization papers as Edward J. Steichen; however, he continued to use his birth name of Eduard until after the First World War.

Steichen met Alfred Stieglitz in 1900, while stopping in New York City en route to Paris from his home in Milwaukee. In that first meeting, Steiglitz expressed praise for Steichen's background in painting, and also bought three photographic prints of Steichen's. In 1902, when Stieglitz was formulating what would become Camera Work, he asked Steichen to design the logo for the magazine, with a custom typeface.

Steichen began experimenting with color photography in 1904, and was one of the first people in the United States to use the Autochrome Lumière process. In 1905, Steichen helped create the Little Galleries of the Photo-Secession with Stieglitz.

In 1911, Steichen was "dared" by Lucien Vogel, the publisher of Jardin des Modes and La Gazette du Bon Ton, to promote fashion as a fine art by the use of photography. Steichen then took photos of gowns designed by couturier Paul Poiret. These photographs were published in the April 1911 issue of the magazine Art et Décoration. According to Jesse Alexander, This is "...now considered to be the first ever modern fashion photography shoot. That is, photographing the garments in such a way as to convey a sense of their physical quality as well as their formal appearance, as opposed to simply illustrating the object."

After World War I, during which he commanded the photographic division of the American Expeditionary Forces, he reverted to straight photography, gradually moving into fashion photography. Steichen's 1928 photo of actress Greta Garbo is recognized as one of the definitive portraits of Garbo.

The initial publication of Ansel Adams' image Moonrise, Hernandez, New Mexico was in U.S. Camera Annual 1943, after being selected by Steichen, who was serving as "photo judge" for the publication. This gave Moonrise an audience before its first formal exhibition at the Museum of Modern Art in 1944.

During World War II, he served as Director of the Naval Aviation Photographic Unit. His war documentary The Fighting Lady won the 1945 Academy Award for Best Documentary. After the war, Steichen served until 1962 as the Director of Photography at New York's Museum of Modern Art. Among other accomplishments, Steichen is appreciated for creating The Family of Man in 1955, a vast exhibition at the Museum of Modern Art consisting of over 500 photos that depicted life, love and death in 68 countries. Steichen's brother-in-law, Carl Sandburg, wrote a "Prologue" for the exhibition catalog. As had been Steichen's wish, the exhibition was donated to the Grand Duchy of Luxembourg. It is now permanently housed in the Luxembourg town of Clervaux.

On December 6, 1963, Steichen was presented with the Presidential Medal of Freedom by President Lyndon Johnson.

A show of early color photographs by Steichen was held at Mudam Luxembourg from July 14 to September 3, 2007.

Steichen purchased a farm that he called Umpawaug in 1928, just outside West Redding, Connecticut. Steichen lived there until his death in 1973. After his death, Steichen's farm was made into a park, known as Topstone Park. Topstone Park is open seasonally to this day.

In February 2006, a print of Steichen's early pictorialist photograph, The Pond — Moonlight (1904), sold for what was then the highest price ever paid for a photograph at auction, U.S. $2.9 million. Steichen took the photograph in Mamaroneck, New York, near the home of his friend, art critic Charles Caffin. The photo features a wooded area and pond, with moonlight appearing between the trees and reflecting on the pond. While the print appears to be a color photograph, the first true color photographic process, the autochrome process, was not available until 1907. Steichen created the impression of color by manually applying layers of light-sensitive gums to the paper. Only three known versions of the Pond-Moonlight are still in existence and, as a result of the hand-layering of the gums, each is unique. In addition to the auctioned print, the other two versions are held in museum collections. The extraordinary sale price of the print is, in part, attributable to its one-of-a-kind character and to its rarity.