Nechayev was born in Ivanovo, then a small textile town, to poor parents — his father was a waiter and sign painter. He had already developed an awareness of social inequality and a resentment of the local nobility in his youth. In 1865 at age 18, Nechayev moved to Moscow, where he worked for the historian Mikhael Pogodin. A year later, he moved to St. Petersburg, passed a teacher's exam and began teaching at a parish school. Nechayev attended lectures at St. Petersburg University (without being officially enrolled) and became acquainted with the subversive Russian literature of the Decembrists, the Petrashevsky Circle, and Mikhail Bakunin, among others, as well as the growing student unrest at the university.

Nechayev participated in student activism in 1868 - 1869, leading a radical minority with Petr Tkachev and others. Nechayev took part in devising this student movement's "Program of revolutionary activities", which stated later a social revolution as its ultimate goal. The program also suggested ways for creating a revolutionary organization and conducting subversive activities. In particular, the program envisioned composition of the Catechism of a Revolutionary, for which Nechayev would become famous.

In January 1869, Nechayev spread false rumors of his arrest in St. Petersburg, then left for Moscow before heading abroad. In Geneva, Switzerland, he pretended to be a representative of a revolutionary committee who had fled from the Peter and Paul Fortress, and he won the confidence of revolutionary - in - exile Mikhail Bakunin and his friend and collaborator Nikolai Ogarev. Ogarev, on Bakunin's suggestion, dedicated a poem to Nechayev:

THE STUDENT (To my young friend Nechaev)

He was born to a wretched fate

And taught in a hard school,

And suffered interminable torments

In years of unceasing labor.

But as the years swept by

His love for the people grew stronger

And fiercer his thirst for the common good

The thirst to improve man's fate.

It was rumoured at the time (and has been claimed by some contemporary writers) that the 55 year old Bakunin became infatuated with the young Nechayev, and the two secretly became lovers. The relationship was certainly close and passionate, and ultimately deeply troubled. Bakunin saw in Nechayev the authentic voice of Russian youth, which he regarded as "the most revolutionary in the world". He would hold onto this idealised vision long after his association with Nechayev became damaging to him.

Ogarev, Bakunin and Nechayev organized a propaganda campaign of subversive material to be sent to Russia, financed by Ogarev from the so called "Bakhmetiev Fund", which had been intended for subsidizing their own revolutionary activities. Alexander Herzen disliked Nechayev's fanaticism and strongly opposed the campaign, believing Nechayev was influencing Bakunin toward more extreme rhetoric. However, Herzen relented to hand over much of the fund to Nechaev, which he was to take to Russia to mobilise support for the revolution.

In late spring 1869, Nechayev wrote the "Catechism of a Revolutionary", a program for the "merciless destruction" of society and the state. The main principle of the "Catechism" — "the ends justify the means" — became Nechayev's slogan throughout his revolutionary career. He saw the ruthless immorality in the pursuit of total control by the Church and State, and believed that the struggle against them must therefore be carried out by any means necessary, with an unwavering focus on their destruction. The individual self is to be subsumed by a greater purpose in a kind of spiritual asceticism which for Nechayev was far more than just a theory, but the guiding principle by which he lived his life. According to the Catechism,

A revolutionary is a doomed man. He has no private interests, no affairs, sentiments, ties, property nor even a name of his own. His entire being is devoured by one purpose, one thought, one passion - the revolution. Heart and soul, not merely by word but by deed, he has severed every link with the social order and with the entire civilized world; with the laws, good manners, conventions, and morality of that world. He is its merciless enemy and continues to inhabit it with only one purpose - to destroy it.

A revolutionary "must infiltrate all social formations including the police. He must exploit rich and influential people, subordinating them to himself. He must aggravate the miseries of the common people, so as to exhaust their patience and incite them to rebel. And, finally, he must ally himself with the savage word of the violent criminal, the only true revolutionary in Russia". 

The book was to influence generations of radicals, and was re-published by the Black Panther Party in 1969 — one hundred years since its original publication. It also influenced the formation of the militant Red Brigades in Italy the same year.

Having left Russia illegally, Nechayev had to sneak back to Moscow in 1869 with help from Bakunin's underground contacts. There he lived an austere life, spending the fund only on political activities. He pretended to be a proxy of the Russian department of the "Worldwide Revolutionary Union" (which did not exist) and created an affiliate of a secret society called Narodnaya Rasprava (Народная расправа, "People's Reprisal"), which, he claimed, had existed for quite some time in every corner of Russia. He spoke passionately to student dissidents about the need to organise. Marxist writer Vera Zasulich recalls that when she first met Nechayev, he immediately tried to recruit her:

Nechayev began to tell me his plans for carrying out a revolution in Russia in the near future. I felt terrible: it was really painful for me to say "That's unlikely," "I don't know about that". I could see that he was very serious, that this was no idle chatter about revolution. He could and would act - wasn't he the ringleader of the students? ... I could imagine no greater pleasure than serving the revolution. I had dared only to dream of it, and yet now he was saying that he wanted to recruit me... And what did I know of "the people"? I knew only the house serfs of Biakolovo and the members of my weaving collective, while he was himself a worker by birth.

Many were impressed by the young proletarian and joined the group. However, the already fanatical Nechayev appeared to be becoming more distrustful of the people around him, even denouncing Bakunin as doctrinaire, "idly running off at the mouth and on paper". One Narodnaya Rasprava member, I.I. Ivanov, disagreed with Nechayev about the distribution of propaganda, and left the group. On November 21, 1869, Nechayev and several comrades beat, strangled and shot Ivanov, hiding the body in a lake through a hole in the ice. This incident was fictionalised by writer Fyodor Dostoyevsky in his political novel, Demons, published three years later, in which the character, Pyotr Stepanovich Verkhovensky, is based on Nechayev.

The body was soon found, and some of his colleagues arrested, but Nechayev eluded capture, and left for Saint Petersburg in late November where he tried to continue his activities to create a clandestine society. On December 15, 1869, he fled the country, heading back to Geneva.

Nechayev was embraced by Bakunin and Ogarev on his return to Switzerland in January 1870 — Bakunin wrote "I so jumped for joy that I nearly smashed the ceiling with my old head!" Soon after their reunion, Herzen died, and a large fund from his personal wealth was made available to Nechayev to continue his political activities. Nechayev issued a number of proclamations aimed at different strata of the Russian population. Together with Ogarev, he published the Kolokol magazine (April - May, 1870, issues 1 to 6). In his article "The Fundamentals of the Future Social System" (Главные основы будущего общественного строя), published in the People's Reprisal (1870, №2), Nechayev shared his vision of a communist system which Karl Marx and Friedrich Engels would later call "barracks communism".

However Nechayev's suspicion of his comrades had grown even greater, and he began stealing letters and private papers with which to blackmail Bakunin and his fellow exiles, should the need arise. He enlisted the help of Herzen's daughter Natalie. Bakunin rebuked Nechayev upon discovery of his duplicity: "Lies, cunning [and] entanglement [are] a necessary and marvelous means for demoralising and destroying the enemy, though certainly not a useful means of obtaining and attracting new friends". Although Bakunin continued to defend the young radical he called "my tiger cub", he began warning friends about his behaviour.

The General Council of peak left wing organisation the "First International" officially dissociated themselves from him, claiming he had abused the name of the organisation. After writing a letter to a publisher on Bakunin's behalf, threatening to kill the publisher if he did not release Bakunin from a contract, Nechayev became even more isolated from his comrades. First International member German Lopatin accused him of theoretical unscrupulousness and pernicious behaviour, prompting Ogarev and Bakunin to publicly sever their relations with him in the summer of 1870 — although Bakunin continued to write Nechayev letters passionately begging for reconciliation and warning him of the danger he was in from the law, who were still pursuing him for Ivanov's murder.

In September 1870, Nechayev published an issue of the Commune magazine in London and later, hiding from the tsarist police, went underground in Paris and then Zurich. He also kept in touch with the Polish blanquists, such as Caspar Turski and others. In 1872, Karl Marx produced the threatening letter Nechayev had written to the publisher at a meeting of the First International, in which Bakunin was also expelled from the organisation.

On August 14, 1872, Nechayev was arrested in Zurich and handed over to the Russian police. He was found guilty on January 8, 1873, and sentenced to 20 years of katorga (hard labor) for killing Ivanov. Nechayev, while locked up in a ravelin of the Peter and Paul Fortress, managed to win over his guards with the strength of his convictions, and by the late 1870s, he was using them to pass on correspondence with revolutionaries on the outside. In December 1880, Nechayev established contact with the Executive Committee of Narodnaya Volya and proposed a plan for his escape. However, he abandoned the plan due to his unwillingness to distract the efforts of the members of Narodnaya Volya from attempting to assassinate Alexander II.

Vera Zasulich, who ten years earlier had been among those investigated for Ivanov's murder, heard that a young political prisoner had been flogged, by order of the head of the St. Petersburg police, General Trepov. Though not a follower of Nechayev, she was outraged by his mistreatment and plight of other political prisoners, and she walked into Trepov's office and shot and wounded him. In an indication of the popular political feeling of the time, she was found not guilty by the jury on the grounds that she had acted out of noble intent.

In 1882, Nechayev died in his cell.

Despite his personal courage and fanatical dedication to the revolutionary cause, Nechayev's methods (later called Nechayevshchina) were viewed to have caused harm to the Russian revolutionary movement by endangering clandestine organizations. According to a playwright Edward Radzinsky Nechayev's methods and ideas have been successfully implemented by many revolutionaries including Vladimir Lenin and Joseph Stalin.