The son of a civil servant, Mahfouz attended Cairo University and worked in the cultural section of the Egyptian civil service from 1934 until his retirement in 1971. His early novels, such as Rādūbīs (1943; “Radobis”), were set in ancient Egypt, but he had turned to describing modern Egyptian society by the time he began his major work, Al-Thulāthiyyah (1956–57), known as The Cairo Trilogy. Its three novels—Bayn al-qaṣrayn (1956; Palace Walk), Qaṣr al-shawq (1957; Palace of Desire), and Al-Sukkariyyah (1957; Sugar Street)—depict the lives of three generations of different families in Cairo from World War I until after the 1952 military coup that overthrew King Farouk. The trilogy provides a penetrating overview of 20th-century Egyptian thought, attitudes, and social change.

In subsequent works Mahfouz offered critical views of the old Egyptian monarchy, British colonialism, and contemporary Egypt. Several of his more notable novels deal with social issues involving women and political prisoners. His novel Awlād ḥāratinā (1959; Children of the Alley) was banned in Egypt for a time because of its controversial treatment of religion and its use of characters based on Muhammad, Moses, and other figures. Due in part to their outrage over the work, Islamic militants later called for his death, and in 1994 Mahfouz was stabbed in the neck.

Mahfouz's other novels include Al-Liṣṣ wa-al-kilāb (1961; The Thief and the Dogs), Al-Shaḥḥādh (1965; The Beggar), Mīrāmār (1967; Miramar), Afrāḥ al-qubba (1981; Wedding Song), and Ḥadīth al-ṣabāḥ wa-al-masāʾ (1987; Morning and Evening Talk). His achievements as a short-story writer are demonstrated in the collections Dunyā Allāh (1963; God's World) and The Seventh Heaven (2005). Mahfouz wrote more than 45 novels and short-story collections, as well as some 30 screenplays and several plays. Aṣdāʾ al-sīrah al-dhātiyyah (1996; Echoes of an Autobiography) is a collection of parables and his sayings. In 1996 the Naguib Mahfouz Medal for Literature was established to honour Arabic writers.