Clare was born in Helpstone (now Helpston) which, at the time of his birth, was in the Soke of Peterborough, Northamptonshire, six miles to the north of Peterborough. Today this lies just inside the northern limit of Cambridgeshire, boundaries having changed since Clare's day. He became an agricultural labourer while still a child, however he attended school in Glintonchurch until he was twelve.

In his early adult years, Clare became a pot boy in the Blue Bell public house and fell in love with Mary Joyce; but her father, a prosperous farmer, forbade her to meet him. Subsequently he was a gardener at Burghley House. He enlisted in the militia, tried camp life with Gypsies, and worked in Pickworth as a lime burner in 1817. In the following year he was obliged to accept parish relief. Malnutrition stemming from childhood may be the main culprit behind his 5-foot stature and may have contributed to his poor physical health in later life.

Clare had bought a copy of Thomson's Seasons and began to write poems and sonnets. In an attempt to hold off his parents' eviction from their home, Clare offered his poems to a local bookseller named Edward Drury. Drury sent Clare's poetry to his cousin John Taylor of the publishing firm of Taylor & Hessey, who had published the work of John Keats. Taylor published Clare's Poems Descriptive of Rural Life and Scenery in 1820. This book was highly praised, and in the next year his Village Minstrel and other Poems were published.

He had married Martha ("Patty") Turner in 1820. An annuity of 15 guineas from the Marquess of Exeter, in whose service he had been, was supplemented by subscription, so that Clare became possessed of £45 annually, a sum far beyond what he had ever earned. Soon, however, his income became insufficient, and in 1823 he was nearly penniless. The Shepherd's Calendar (1827) met with little success, which was not increased by his hawking it himself. As he worked again in the fields his health temporarily improved; but he soon became seriously ill. Earl FitzWilliam presented him with a new cottage and a piece of ground, but Clare could not settle in his new home.

Clare was constantly torn between the two worlds of literary London and his often illiterate neighbours; between the need to write poetry and the need for money to feed and clothe his children. His health began to suffer, and he had bouts of severe depression, which became worse after his sixth child was born in 1830 and as his poetry sold less well. In 1832, his friends and his London patrons clubbed together to move the family to a larger cottage with a smallholding in the village of Northborough, not far from Helpston. However, he felt only more alienated.

His last work, the Rural Muse (1835), was noticed favorably by Christopher North and other reviewers, but this was not enough to support his wife and seven children. Clare's mental health began to worsen. As his alcohol consumption steadily increased along with his dissatisfaction with his own identity, Clare's behaviour became more erratic. A notable instance of this behaviour was demonstrated in his interruption of a performance of The Merchant of Venice, in which Clare verbally assaulted Shylock. He was becoming a burden to Patty and his family, and in July 1837, on the recommendation of his publishing friend, John Taylor, Clare went of his own volition (accompanied by a friend of Taylor's) to Dr Matthew Allen's High Beach Private Asylum near Loughton, in Epping Forest. Taylor had assured Clare that he would receive the best medical care.

During his first few asylum years in Essex (1837 – 1841), Clare re-wrote famous poems and sonnets by Lord Byron. His own version of Child Harold became a lament for past lost love, and Don Juan, A Poem became an acerbic, misogynistic, sexualised rant redolent of an aging Regency dandy. Clare also took credit for Shakespeare's plays, claiming to be the Renaissance genius himself. "I'm John Clare now," the poet claimed to a newspaper editor, "I was Byron and Shakespeare formerly."

In 1841, Clare left the asylum in Essex, to walk home, believing that he was to meet his first love Mary Joyce; Clare was convinced that he was married with children to her and Martha as well. He did not believe her family when they told him she had died accidentally three years earlier in a house fire. He remained free, mostly at home in Northborough, for the five months following, but eventually Patty called the doctors in. Between Christmas and New Year in 1841, Clare was committed to the Northamptonshire County General Lunatic Asylum (now St Andrew's Hospital). Upon Clare's arrival at the asylum, the accompanying doctor, Fenwick Skrimshire, who had treated Clare since 1820, completed the admission papers. To the enquiry "Was the insanity preceded by any severe or long continued mental emotion or exertion?", Dr. Skrimshire entered: "After years of poetical prosing." He remained here for the rest of his life under the humane regime of Dr Thomas Octavius Prichard, encouraged and helped to write. Here he wrote possibly his most famous poem, I Am.

He died on 20 May 1864, in his 71st year. His remains were returned to Helpston for burial in St Botolph’s churchyard. Today, children at the John Clare School, Helpston's primary, parade through the village and place their 'midsummer cushions' around Clare's gravestone (which has the inscriptions "To the Memory of John Clare The Northamptonshire Peasant Poet" and "A Poet is Born not Made") on his birthday, in honour of their most famous resident. The thatched cottage where he was born was bought by the John Clare Education & Environment Trust in 2005 and is restoring the cottage to its 18th century state.

In his time, Clare was commonly known as "the Northamptonshire Peasant Poet". Since his formal education was brief, Clare resisted the use of the increasingly standardised English grammar and orthography in his poetry and prose. Many of his poems would come to incorporate terms used locally in his Northamptonshire dialect, such as 'pooty' (snail), 'lady-cow' (ladybird), 'crizzle' (to crisp) and 'throstle' (song thrush).

In his early life he struggled to find a place for his poetry in the changing literary fashions of the day. He also felt that he did not belong with other peasants. Clare once wrote

"I live here among the ignorant like a lost man in fact like one whom the rest seemes careless of having anything to do with — they hardly dare talk in my company for fear I should mention them in my writings and I find more pleasure in wandering the fields than in musing among my silent neighbours who are insensible to everything but toiling and talking of it and that to no purpose."

It is common to see an absence of punctuation in many of Clare's original writings, although many publishers felt the need to remedy this practice in the majority of his work. Clare argued with his editors about how it should be presented to the public.

Clare grew up during a period of massive changes in both town and countryside as the Industrial Revolution swept Europe. Many former agricultural workers, including children, moved away from the countryside to over crowded cities, following factory work. The Agricultural Revolution saw pastures ploughed up, trees and hedges uprooted, the fens drained and the common land enclosed. This destruction of a centuries old way of life distressed Clare deeply. His political and social views were predominantly conservative ("I am as far as my politics reaches 'King and Country' — no Innovations in Religion and Government say I."). He refused even to complain about the subordinate position to which English society relegated him, swearing that "with the old dish that was served to my forefathers I am content."

His early work delights both in nature and the cycle of the rural year. Poems such as Winter Evening, Haymaking and Wood Pictures in Summer celebrate the beauty of the world and the certainties of rural life, where animals must be fed and crops harvested. Poems such as Little Trotty Wagtail show his sharp observation of wildlife, though The Badger shows his lack of sentiment about the place of animals in the countryside. At this time, he often used poetic forms such as the sonnet and the rhyming couplet. His later poetry tends to be more meditative and use forms similar to the folks songs and ballads of his youth. An example of this is Evening.

His knowledge of the natural world went far beyond that of the major Romantic poets. However, poems such as I Am show a metaphysical depth on a par with his contemporary poets and many of his pre-asylum poems deal with intricate play on the nature of linguistics. His 'bird's nest poems', it can be argued, illustrate the self-awareness, and obsession with the creative process that captivated the romantics. Clare was the most influential poet, aside from Wordsworth to practice in an older style.

Clare was relatively forgotten during the later nineteenth century, but interest in his work was revived by Arthur Symons in 1908, Edmund Blunden in 1920 and John and Anne Tibble in their ground breaking 1935 2 volume edition. Benjamin Britten set some of 'May' from A Shepherd's Calendar in his Spring Symphony of 1948.

Copyright to much of his work has been claimed since 1965 by the editor of the Complete Poetry (OUP, 9 vols., 1984 – 2003), Professor Eric Robinson, though these claims have been contested. With recent publishers refusing to acknowledge the claim (especially in recent editions from Faber and Carcanet), it seems the copyright is now defunct.

Today the largest collection of original Clare manuscripts are housed at Peterborough Museum, where they are available to view by appointment. The John Clare Trust purchased Clare Cottage in Helpston in 2005, preserving it for future generations. The Cottage has been restored, using traditional building methods, to create a centre where people can learn about John Clare, his works, how rural people lived in the early 19th century and also gain an understanding of the environment.

Since 1993, the John Clare Society of North America has organized an annual session of scholarly papers concerning John Clare at the annual Convention of the Modern Language Association of America.