Allen was born as Allen Stewart Königsberg in the Bronx, New York, into a Jewish family. His parents Martin and Nettie lived in Flatbush, where he attended a Hebrew school for eight years. After that, he went to Public School 99 and then to Midwood High, where "Red" (as he was called because of his hair) impressed students with his extraordinary talent at cards and magic tricks. To raise money, he began writing gags for the agent David O. Alber, who sold them to newspaper columnists. Reportedly, Allen's first published joke was "I am two with Nature." At sixteen, he started writing for show stars like Sid Caesar and began calling himself Woody Allen. He was a gifted comedian from an early stage.

He would later joke that when he was young he was often sent to inter-faith summer camps, in which he "was savagely beaten by children of all races and creeds".

After high school, he went to New York University where he studied communication and film but, never much of a student, he soon dropped out due to poor grades (he would later joke he was expelled for cheating on the metaphysics final: "I looked into the soul of the boy sitting next to me."). He also briefly attended City College of New York after that. At nineteen, he married Harlene Rosen, a philosophy student, and started writing scripts for The Ed Sullivan Show, The Tonight Show and others. In 1957, he won his first Emmy Award; about the same time, he divorced Harlene.

He started writing prose and plays, and in 1960, started a new career as a stand-up comedian and also began writing for the popular Candid Camera television show, even appearing in some episodes. Together with his managers he turned his weaknesses into his strengths and developed the neurotic, nervous, and shy figure famous from his later movies. He soon became an immensely popular comedian and appeared frequently in nightclubs and on television.

His first movie production was What's New, Pussycat? in 1965, for which he wrote the screenplay. It was a largely unpleasant experience for Allen as he was trapped in Paris for six months during the production. Furthermore, the studio never showed much respect for his script, altering the film to the point where it bore little resemblance to Allen's original vision. Allen's first directorial effort was What's Up, Tiger Lily? (1966), in which an existing Japanese spy movie was redubbed in English by Allen and his friends with completely new, comic dialogue. In 1967, he also appeared in the offbeat James Bond film, Casino Royale.

His first conventional directing effort was Take The Money and Run (1969), which was followed by Bananas, Everything You Always Wanted To Know About Sex (But Were Afraid to Ask), Sleeper, and Love and Death. In 1972, he also starred in the film version of his own play called Play It Again, Sam, which was directed by Herbert Ross. All of Allen's early films are pure comedies that relied heavily on slapstick, inventive sight gags, and non-stop one-liners. Among the many notable influences on these films are Bob Hope and Groucho Marx.

In 1976, he starred in, but did not direct, The Front, a serious look at Hollywood blacklisting during the 1950s. He returned to directing in 1977's Annie Hall, a modern classic that marked a major turn away to more sophisticated humor and thoughtful drama (the movie won four Academy Awards, including Best Picture, Best Director, and Best Actress). The film set the standard for modern romantic comedy and also started a fashion trend with the unique dress worn by Diane Keaton in the film. He also directed the serious drama Interiors, in the manner of the great Swedish director, Ingmar Bergman, one of Allen's major influences. His most successful movies were produced in a ten year period starting with Annie Hall; other critical and financial successes were Manhattan, The Purple Rose of Cairo ( named by Time Magazine as one of the 100 best films of all time, and Allen's personal favorite) and Hannah and Her Sisters (Winner of three Academy Awards).

Allen won the 1978 O. Henry Award for his short story "The Kugelmass Episode" published in The New Yorker on May 2, 1977.

Most of his 1980s films, even the comedies, have somber and philosophical undertone. Many of them like September and Stardust Memories are often said to be heavily influenced by the works of European directors, most notably Ingmar Bergman and Federico Fellini. Stardust Memories was considered by many to be a biting piece of work; the main character (played by Allen) expressed resentment and scorn for his fans. In the film, overcome by the recent death of a friend from illness, he states, "I don't want to make funny movies any more."

Allen twice won the César Award for Best Foreign Film, the first in 1980 for Manhattan and the second in 1986 for The Purple Rose of Cairo. He is also the most frequently nominated person in the Academy Award catagory of Best Originial Screenplay, with a stunning total of 13 nominations. In addition to that, he has also been nominated many times in the catagory of Best Director, and his actors are also among the most frequently nominated people in their respective catagories.

His 1992 film Shadows and Fog is an homage to Fritz Lang, G.W. Pabst and F.W. Murnau, and the German expressionists.

In the late 1990s he returned to lighter movies: Everyone Says I Love You, a musical, Mighty Aphrodite, for which Mira Sorvino won an Academy Award, and others.

In 1992, his personal life became very public, when he left his long-term partner Mia Farrow after she discovered his secret affair with her adopted daughter Soon-Yi Previn. Farrow accused him of being a pedophile (Previn is 35 years his junior) and of abusing their seven-year-old daughter Dylan- a charge that was later dismissed. These events eerily echoed the plotline of his film released at the time, Husbands and Wives. In that film, Woody and Mia play a couple whose decade-long relationship is falling apart, with Woody's character becoming attracted to one of his 20-year-old students. Farrow discusses the events in What Falls Away: A Memoir, ISBN 0385471874.

Allen and Previn married in 1997, and later adopted two daughters, naming both (Bechet Allen and Manzie Tio Allen) after jazz musicians (Sidney Bechet and Manzie Johnson).

Woody Allen continues to produce an average of one film a year.