Böhme was born at the end of the Protestant Reformation period. After receiving a rudimentary education, he went, in 1594 or 1595, to nearby Görlitz, a town where controversies over Reformation issues seethed. Here crypto-Calvinists (Lutherans charged with maintaining Calvinist views), Anabaptists (radical Protestants), Schwenkfeldians (followers of the Reformer Schwenkfeld), Paracelsian physicians (followers of the occultic physician Paracelsus), and humanists vied with orthodox Lutherans. Martin Möller, the Lutheran pastor of Görlitz, was “awakening” many in the conventicles that he had established.

In 1600, newly married and just established with a shoemaker's bench of his own, Böhme, probably stimulated by Möller, had a religious experience within the period of a quarter hour wherein he gained an empirical and speculative insight that helped him to resolve the tensions of his age. The strain between medieval and Renaissance cosmologies (dealing with the order of the universe), the perennial problem of evil, the collapse of feudal hierarchies, and the political and religious bifurcation of the time found resolution in Böhme's rediscovery, as he said, of the dialectical principle that “in Yes and No all things consist.” Basically Lutheran (“we shall fear and love God,” as Luther's Small Catechism states), this principle became with Böhme a Realdialektik (“real dialectic”), a wide-ranging polarization of empirical or natural reality.

Germinating for several years, the insight led him to commit his thoughts to paper, at first for his own use. The manuscript was entitled Aurora, oder Morgenröthe im Aufgang (1612; Aurora) and was written in stages. Called by Böhme a “childlike beginning,” it was a conglomeration of theology, philosophy, and what then passed for astrology, all bound together by a common devotional theme. Circulating among Böhme's friends, a copy of Aurora fell into the hands of Gregory Richter, successor to Martin Möller as pastor, who condemned the shoemaker's pretensions to theology. Richter brought the matter up with the Görlitz town council, which forbade further writing on Böhme's part.

A period of silence ensued during which Böhme's ideas matured and his outer affairs prospered. He read the “high masters” as well as other unnamed books that were lent to him by the circle of neighbours and friends who were awed by the book-writing intellectual cobbler. These friends—some physicians, and others of the nobility—introduced Böhme to speculative alchemy, especially to the writings of the Swiss physician Paracelsus which were then quite popular. The alchemical and mystical views of Paracelsus further inspired Böhme's interest in nature mysticism and gave him the terminology that, in a partly integrated way, dominated his next period.

Although he never worked in a laboratory himself, Böhme did use its alchemical terms to describe both his nature mysticism and his subjective experiences, which he sought to integrate into a common framework. During this period Böhme wrote at least six tracts that were circulated guardedly among his friends, creating an influential and respected reputation for him. This second period of writing activity began in 1619, the year when the Thirty Years' War (1618–48) was beginning to gain momentum; in fact, Böhme himself was in Prague when the Winter King, Frederick V of the Rhine Palatinate, entered. The various strident controversies of the age forced Böhme into a period of religious apologetics wherein he had to protest his orthodoxy against accusations, more implied than actual, of Calvinism (Reformed views), chiliasm (belief in the 1,000-year reign of God's people at the end of history), and rabid sectarianism. Reconstructing his theological views, he wrote a series of devotional tracts dealing with penitence, resignation, regeneration—traditional themes of German mysticism. In 1622 his friends had several of these devotional tracts printed in Görlitz under the title Der Weg zu Christo (The Way to Christ), a small work joining nature mysticism with devotional fervour. Publication of this tract brought about the intense displeasure of Richter, who incited the populace against Böhme.

In 1623, the year of his maturity, he wrote two major works: The Great Mystery and On the Election of Grace. The former explained the creation of the universe as told in Genesis in terms of the Paracelsian three principles (including the mystical elements “salt,” “sulfur,” and “mercury”), thus joining Renaissance nature mysticism with biblical religion. The latter, more philosophical, gave exposition in terms of dialectical insight to the problem of freedom that Calvinist predestination (the view that man's destiny is foreknown by God) was then making acute. This theme later was taken up by the idealist philosopher Friedrich Schelling and by a German theologian, Franz von Baader, whose commentary for On the Election of Grace is still held in high regard by scholars.

Böhme continued his writing at hectic pace, perhaps freed from business obligations by financial help from his friends. Between 1619, when he defiantly renewed his writing, and 1624, when he died, he produced at least 30 works. His defiance of the town council of Görlitz brought him further difficulty, and he was banished, being cited to the elector's court in Dresden, where, to all appearances, he found vindication because he returned to his home. Although vindicated by the theologians who had examined his views, he was not free from the rancorous moods of his neighbours who were instigated in their attacks by Richter. Esteemed by his friends among the nobility, physicians, and intellectuals, he fled to one of the neighbouring castles where he clearly was the central figure in some kind of secretive group. There he fell sick, and, sensing that his end was near, he was taken back home to Görlitz where, attended by his wife and sons, he began to weaken. He was examined by ecclesiastical authorities and found orthodox enough to be given the sacrament, and in a mood of charismatic expectancy, he died.