Tasso was the son of Bernardo Tasso, a poet and courtier, and of Porzia de' Rossi. His childhood was overshadowed by family misfortunes: his father followed the prince of Salerno into exile in 1552; the family estates were confiscated; his mother died in 1556; and there was subsequent litigation about her dowry. Tasso joined his father in Rome in 1554 and two years later at the court of the Duke of Urbino, where he was educated with the duke's son. His imagination had already been fired by stories of the Crusades, and he was struck in 1558 by news of an attack by the Turks on Sorrento, where his sister Cornelia narrowly escaped the accompanying massacre.

While in Venice the following year, Tasso began to write an epic in ottava rima (an Italian stanza of eight 11-syllabled lines), Gerusalemme, about the First Crusade (which recovered Jerusalem from the Turks in 1099). He soon interrupted its composition, probably realizing that he was too inexperienced to write a historical epic, and turned to themes of chivalry. The resulting Rinaldo (1562) exhibited his technical ability but not as yet his poetic genius.

In 1560 he was sent to study law in Padua and there met the humanist and critic Sperone Speroni, under whose guidance he studied Aristotle's Poetics. It was probably then that he started writing his Discorsi dell'arte poetica (1587; “Treatise on the Art of Poetry”), explaining therein his qualified acceptance of the rules supposedly laid down by Aristotle in 4th-century-BC Greece. (For instance, Tasso maintained that unity of action should not exclude a variety of episodes.)

In 1565 Tasso entered the service of Luigi, cardinal d'Este, and frequented the court of Duke Alfonso II d'Este at Ferrara, where he enjoyed the patronage of the duke's sisters, Lucrezia and Leonora, for whom he wrote some of his finest lyrical poems. In 1569 his father died; the following year Lucrezia left Ferrara, and Tasso followed the cardinal to Paris, where he met a fellow poet, the Frenchman Pierre Ronsard. Back in Ferrara in 1571, he became one of the duke's courtiers and devoted himself to intense poetic activity. In 1573 he wrote the pastoral (pastoral literature) drama L'Aminta (performed 1573; published 1581), which transcends the convention of artificial rusticity with the sensuous, lyrical inspiration of its picture of Arcadia. The tone of L'Aminta is lyrical rather than dramatic; the play presents with great delicacy of feeling a series of vignettes that culminate in the shepherd Aminta's long-sought attainment of his beloved, Silvia. The play reflects in its idealization of court life the ephemeral period of happiness Tasso had enjoyed at Ferrara.

In 1575 Tasso completed his masterpiece, the Gerusalemme liberata, on which he had been working since his stay in Ferrara. In this epic poem Tasso narrates the actions of the Christian army led by Godfrey of Bouillon during the last months of the First Crusade, culminating in the conquest of Jerusalem and the Battle of Ascalon. To the poem's principal historical action Tasso added a number of imaginary episodes in which his lyrical and hedonistic imagination could find free expression. The most prominent of these episodes is the story of the Italian hero Rinaldo, including his rebellion, his love for the Saracen girl Armida, and his repentance and decisive participation in the final battle. Tasso also added the story of the Italian hero Tancred and his love for the beautiful Saracen Clorinda, whom Tancred unwittingly kills in battle; the secret passion of Erminia, princess of Antioch, for Tancred; and the intervention of supernatural forces in favour of Aladino, the king of Jerusalem.

In composing the Liberata, Tasso tried to establish a balance between the moral aspirations of his times and his own sensuous inspiration, and between the requirements of the formal rules laid down for the epic by Renaissance scholars and the impulse of his own lyrical fantasy. He succeeded in reconciling invention with historical truth by adding the aforementioned romantic and idyllic episodes to the firm groundwork of the principal historical action. These episodes contribute much of the lyrical charm that the poem possesses.

Aware of his epic's poetic novelty, Tasso went to Rome in order to arrange its revision by a group of critics. Back in Ferrara in 1576, he started revising his work in a contradictory mood, in which he felt the urge both to accept the criticism he himself had sought and yet to rebel against this kind of authority. He developed a persecution mania, accompanied by unwarranted scruples about his own religious orthodoxy, and the following years were characterized by sudden departures from Ferrara and by violent crises, the latter culminating in his incarceration in the hospital of Santa Anna (1579–86) by order of the Duke of Ferrara. During his confinement Tasso wrote a number of philosophical and moral dialogues that, together with his numerous letters, are among the best examples of 16th-century Italian prose. In 1581 the first editions of the Gerusalemme liberata and portions of the Rime e prose were published. A long controversy started among Italian critics on the respective merits of his epic and of its immediate predecessor, Ludovico Ariosto's chivalric poem Orlando furioso, Tasso himself taking part in the controversy with an Apologia (1585).

In July 1586 Tasso was released from Santa Anna, thanks to the intervention of Vincenzo Gonzaga, prince of Mantua, who received him at his court. After a revival of creative inspiration—at Mantua he completed his tragedy Galealto, retitled Re Torrismondo (1587)—he relapsed into his usual inquietude and fled from Mantua, wandering mainly between Rome and Naples, where he composed his religious poems Monte oliveto (1605; “Mount of Olives”) and Le sette giornate del mondo creato (1607; “The Seven Days of Creation”). In May 1592 he was given hospitality in Rome by Cardinal Cinzio Aldobrandini, a nephew of Pope Clement VIII. To this patron he dedicated a new version of his epic (Gerusalemme conquistata, published 1593), a poetic failure that reveals the extent of Tasso's final submission to the moral and literary prejudices of the times. He wrote two more religious poems (Lagrime di Maria Vergine and Lagrime di Gesù Cristo), and in June 1594 he went again to Naples, where his Discorsi del poema eroico (1594; “Treatise on Epic Poetry”) was published. In the Discorsi he tried to justify the new version of his epic according to his modified conception of poetic art. On Tasso's return to Rome in November 1594, the pope granted him an annual pension and promised to make him poet laureate. But Tasso fell ill in the following March, was moved to the convent of San Onofrio, and died within a few weeks.

It was not long before Gerusalemme liberata was translated and imitated in many European languages, but its mixed reception following publication aggravated Tasso's melancholic disposition. This melancholy was partly caused by a contrast between his hedonistic ideals—as displayed in his pastoral drama Aminta—and his religious aspirations in accordance with the rigid morality of the Counter-Reformation, the Roman Catholic church's movement of revival in answer to Protestantism. The restlessness of the poet's life, his mental illness, his supposed romantic loves, and his alleged persecutions all gave rise to a legend about the man. Tasso became a literary subject first in 17th-century Italy and then in 18th- and 19th-century Europe, being finally represented as the man of genius who is misunderstood and persecuted. Modern criticism refers the peculiarities of his life and character to the moral incertitude of the times.