Banks was born in London to William Banks, a wealthy Lincolnshire country squire and member of the House of Commons, and his wife Sarah, daughter of William Bate. Joseph was educated at Harrow School from the age of 9, and at Eton College from 1756; his fellow students included Constantine John Phipps. As a boy Banks enjoyed exploring the Lincolnshire countryside, and developed a keen interest in nature, history and botany. When he was 17 he was inoculated with smallpox, but he became ill and did not return to school. In late 1760 he was enrolled as a gentleman - commoner at Oxford University. At Oxford he matriculated at Christ Church, where his studies were largely focused on natural history rather than the classical curriculum. Determined to receive botanical instruction, he paid the Cambridge botanist Israel Lyons to deliver a series of lectures at Oxford in 1764.

Banks left Oxford for Chelsea in December 1763. He continued to attend the university until 1764, but left that year without taking a degree. His father had died in 1761, so when he turned 21 he inherited the impressive estate of Revesby Estate, in Lincolnshire, becoming the local squire and magistrate, and sharing his time between Lincolnshire and London. From his mother's home in Chelsea he kept up his interest in science by attending the Chelsea Physic Garden of the Worshipful Society of Apothecaries and the British Museum, where he met Daniel Solander. He began to make friends among the scientific men of his day and to correspond with Carl Linnaeus, whom he came to know through Solander. As Banks's influence increased, he became an adviser to King George III and urged the monarch to support voyages of discovery to new lands, hoping to indulge his own interest in botany.
In 1766 Banks was elected to the Royal Society, and in the same year he accompanied Phipps to Newfoundland and Labrador with a view of studying their natural history. He made his name by publishing the first Linnean descriptions of the plants and animals of Newfoundland and Labrador.

Banks was promptly appointed to a joint Royal Navy/Royal Society scientific expedition to the south Pacific Ocean on HM Bark Endeavour, 1768 — 1771. This was the first of James Cook's voyages of discovery in that region. This voyage went to Brazil, where Banks made the first scientific description of a now common garden plant, bougainvillea (named after Cook's French counterpart, Louis Antoine de Bougainville), and to other parts of South America. The voyage then progressed to Tahiti (where the transit of Venus was observed, the overt purpose of the mission), to New Zealand and to the east coast of Australia, where Cook mapped the coastline and made landfall at Botany Bay and at Endeavour River (near modern Cooktown) in Queensland, where they spent almost seven weeks ashore while the ship was repaired after foundering on the Great Barrier Reef. While they were in Australia Banks, the Swedish botanist Daniel Solander and the Finnish botanist Dr. Herman Spöring Jr. made the first major collection of Australian flora, describing many species new to science. Almost 800 specimens were illustrated by the artist Sydney Parkinson and appear in Banks' Florilegium, finally published in 35 volumes between 1980 and 1990.

Banks arrived back in England on 12 July 1771 and immediately became famous. He intended to go with Cook on his second voyage, which began on 13 May 1772, but difficulties arose about the accommodation for Banks and his assistants, and he decided not to go. In July of the same year he and Daniel Solander visited the Isle of Wight, the western islands of Scotland and Iceland aboard Sir Lawrence and returned with many botanical specimens. In 1773, he toured south Wales in the company of artist Paul Sandby. When he settled in London he began work on his Florilegium. He kept in touch with most of the scientists of his time, was elected a foreign member of the Royal Swedish Academy of Sciences in 1773, and added a fresh interest when he was elected to the Dilettante Society in 1774. He was afterwards secretary of this society from 1778 to 1797. On 30 November 1778 he was elected President of the Royal Society, a position he was to hold with great distinction for over 41 years.

In March 1779 Banks married Dorothea Hugesson, daughter of W.W. Hugesson, and settled in a large house at 32 Soho Square (now comprising British offices for 20th Century Fox). It continued to be his London residence for the remainder of his life. There he welcomed the scientists, students and authors of his period, and many distinguished foreign visitors. His sister Sarah Sophia Banks lived in the house with Banks and his wife. He had as librarian and curator of his collections Solander, Jonas Carlsson Dryander and Robert Brown in succession. Also in 1779 Banks took a lease on, and eventually bought outright, a house with thirty-four acres along the northern side of the London Road, Isleworth. The grounds contained a natural spring, which was an important attraction to him. Banks spent much time and effort on this secondary home. He steadily created a renowned botanical masterpiece on the estate, achieved primarily with many of the great variety of foreign plants he had collected on his extensive travels around the world, particularly to Australia and the South Seas. The house and surrounding district became known as 'Spring Grove'. The house was substantially extended and rebuilt by later owners and is now part of West Thames College.

Banks was made a baronet in 1781, three years after being elected president of the Royal Society. During much of this time Banks was an informal adviser to King George III on the Royal Botanic Gardens, Kew, a position that was formalized in 1797. Banks dispatched explorers and botanists to many parts of the world, and through these efforts Kew Gardens became arguably the pre-eminent botanical gardens in the world, with many species being introduced to Europe through them. Banks directly fostered several famous voyages, including that of George Vancouver to the northeastern Pacific (Pacific Northwest), and William Bligh's voyages to transplant breadfruit from the South Pacific to the Caribbean islands (the latter enterprise brought about the mutiny on the Bounty). The redoubtable Bligh was also appointed governor of New South Wales on Banks's recommendation, which in turn led to the Rum Rebellion of 1808. Banks was also a major financial supporter of William Smith in his decade long efforts to create a geological map of England, the first ever geological map of an entire country. Banks also chose Allan Cunningham for voyages to Brazil and the north and northwest coasts of Australia to collect specimens.

It was Banks's own time in Australia, however, that led to his interest in the British colonisation of that continent. He was to be the greatest proponent of settlement in New South Wales: in fact, the name "Banksia" was proposed for the region by Linnaeus. In the end a genus of Proteaceae was named in his honour as Banksia. In 1779 Banks, giving evidence before a committee of the House of Commons, had stated that in his opinion the place most eligible for the reception of convicts "was Botany Bay, on the coast of New Holland". His interest did not stop there, for when the settlement started, and for 20 years afterwards, his fostering care and influence was always being exercised. He was in fact the general adviser to the government on all Australian matters. He arranged that a large number of useful trees and plants should be sent out in the supply ship HMS Guardian which, however, was wrecked, and every vessel that came from New South Wales brought plants or animals or geological and other specimens to Banks. He was continually called on for help in developing the agriculture and trade of the colony, and his influence was used in connection with the sending out of early free settlers, one of whom, a young gardener George Suttor, afterwards wrote a memoir of Banks. The three earliest governors of the colony, Arthur Phillip, John Hunter, and Philip Gidley King, were continually in correspondence with him. He was interested in the explorations of Matthew Flinders, George Bass and Lieutenant James Grant, and among his paid helpers were George Caley, Robert Brown and Allan Cunningham.

Among other activities, Banks found time to serve as a trustee of the British Museum for 42 years.

Banks worked with Sir George Staunton in producing the official account of the British mission to the Chinese Imperial court. This diplomatic and trade mission was headed by Lord George Macartney. Although the Macartney Embassy returned to London without obtaining any concession from China, the mission could have been termed a success because it brought back detailed observations. This multi-volume work was taken chiefly from the papers of Lord Macartney and from the papers of Sir Erasmus Gower, who was Commander of the expedition. Banks was responsible for selecting and arranging engraving of the illustrations in this official record.

Banks's health began to fail early in the 19th century and he suffered from gout every winter. After 1805 he practically lost the use of his legs and had to be wheeled to his meetings in a chair, but his mind remained as vigorous as ever. He had been a member of the Society of Antiquaries nearly all his life, and he developed an interest in archaeology in his later years. He was made an honorary founding member of the Wernerian Natural History Society of Edinburgh in 1808. In May 1820 he forwarded his resignation as president of the Royal Society, but withdrew it at the request of the council. He died on 19 June 1820 in Spring Grove House and was buried at St Leonard's Church, Heston. Lady Banks survived him, but there were no children.

Banks's was a major supporter of the internationalist nature of science, being actively involved both in keeping open the lines of communication with continental scientists during the Napoleonic Wars, and in introducing the British people to the wonders of the wider world. As befits someone with such a role in opening the South Pacific to Europe, his name dots the map of the region: Banks Peninsula on South Island, New Zealand; the Banks Islands in modern-day Vanuatu; and Banks Island in the Northwest Territories, Canada. The Canberra suburb of Banks, the electoral Division of Banks, and the Sydney suburbs of Bankstown, Banksia and Banksmeadow are all named after him. Banks also appeared on the Australian currency paper $5 dollar note before it was replaced by the later polymer currency. In 1986 he was honoured on a postage stamp depicting his portrait issued by Australia Post.

In Lincoln The Sir Joseph Banks Conservatory can be found at The Lawn, Lincoln, adjacent to Lincoln Castle. The conservatory is a popular tourist attraction with a tropical hot house themed with plants reminiscent of the voyages of its namesake, including many samples of vegetation from across the world, including Australia. There is also a window in Lincoln Cathedral in his honour.

In Boston, Lincolnshire Banks was Recorder for the town and a portrait painted in 1814 by Thomas Phillips RA was commissioned by the Corporation of Boston, as a tribute to one whose 'judicious and active exertions improved and enriched this borough and neighbourhood'. It cost them just 100 guineas. The portrait is now hanging in the Council Chamber of the Guildhall Museum.

In Horncastle, Lincolnshire, the Sir Joseph Banks centre can be found, this is a grade II listed building which was recently restored by the Heritage Trust of Lincolnshire to celebrate the life of Sir Joseph Banks. Horncastle is situated only a few miles from his Revesby Estate and Banks himself was the towns Lord of the Manor. The centre is located on Bridge street, Horncastle, Lincolnshire, and boasts research facilities, historic links to Australia and a garden in which rare plants can be viewed and purchased.