Fouqué was a descendant of French aristocrats, an eager reader of English and Scandinavian literature and Greek and Norse myths, and a military officer. He became a serious writer after he met scholar and critic August Wilhelm Schlegel. In his writings Fouqué expressed heroic ideals of chivalry designed to arouse a sense of German tradition and national character in his contemporaries during the Napoleonic era. His ideas, based on the view of linguistic development first conceived by the philosopher J.G. Fichte (Fichte, Johann Gottlieb), stressed the influence of the mother tongue in shaping the mind.

A prolific writer, Fouqué gathered much of his material from Scandinavian sagas and myths. His dramatic trilogy, Der Held des Nordens (1808–10; “Hero of the North”), is the first modern dramatic treatment of the Nibelung story and a precedent for the later dramas of Friedrich Hebbel and the operas of Richard Wagner. His most lasting success, however, has been the story of Undine, a water sprite who marries the knight Hildebrand to acquire a soul and thus become human but who later loses this love to the treacheries of her uncle Kuhleborn and the lady Berthulda. Although Fouqué's works were at first enthusiastically received, after 1820 they rapidly passed out of fashion. Fouqué died in poverty after belated recognition by Frederick William IV.