Basquiat was a precocious child who learned how to read and write by age four and was a gifted artist. His teachers noticed his artistic abilities, and his mother encouraged her son's artistic talent. By the age of eleven, Basquiat could fluently speak, read, and write French, Spanish, and English.

When he was eleven years old, his mother was committed to a mental institution and thereafter spent time in and out of institutions. Basquiat dropped out of Edward R. Murrow High School in the tenth grade. At 15, Basquiat ran away from home. He slept on park benches in Washington Square Park.

In 1976, Basquiat and friend Al Diaz began spray-painting graffiti on buildings in Lower Manhattan, working under the pseudonym SAMO. The designs featured inscribed messages such as "Plush safe he think.. SAMO" and "SAMO as an escape clause." On December 11, 1978, the Village Voice published an article about the graffiti. When Basquiat & Diaz ended their friendship, The SAMO project ended with the epitaph "SAMO IS DEAD," inscribed on the walls of SoHo buildings in 1979.

Continuing his activities as a graffiti artist, Basquiat often incorporated words into his paintings. Before his career as a painter began, he produced punk-inspired postcards for sale on the street, and became known for the political–poetical graffiti. He would often draw on random objects and surfaces, including other people's property. On one occasion Basquiat painted his girlfriend's dress with the words "Little Shit Brown".

The conjunction of various media is an integral element of Basquiat's art. His paintings are typically covered with text and codes of all kinds: words, letters, numerals, pictograms, logos, map symbols, diagrams and more.

Basquiat often painted in expensive Armani suits and would even appear in public in the same paint-splattered suits.

A major reference source used by Basquiat throughout his career was the book Gray's Anatomy, which his mother gave to him while in the hospital at age seven. It remained influential in his depictions of internal human anatomy, and in its mixture of image and text. Other major sources were Henry Dreyfuss Symbol Sourcebook, Leonardo Da Vinci's notebooks, and Brentjes African Rock Art.

In 1980, Basquiat starred in O'Brien's independent film Downtown 81, originally titled New York Beat. That same year, Basquiat discovered Andy Warhol, while he was eating at a restaurant. Basquiat presented Warhol samples of his work, and Warhol was stunned by Basquait's genius and allure. The men later collaborated.

That same year, Basquiat participated in The Times Square Show, a multi-artist exhibition sponsored by Collaborative Projects Incorporated (Colab) and Fashion Moda. In 1981, Rene Ricard published "The Radiant Child" in Artforum magazine,which brought Basquiat to the attention of the art world.

In late 1981, he joined the Annina Nosei gallery in SoHo. By 1982, Basquiat was showing regularly alongside other Neo-expressionist artists including Julian Schnabel, David Salle, Francesco Clemente, and Enzo Cucchi. He was represented in Los Angeles by the Larry Gagosian gallery and throughout Europe by Bruno Bischofberger. He briefly dated then-aspiring performer, Madonna, in late 1982. That same year, Basquiat also worked briefly with musician and artist David Bowie.

By 1986, Basquiat had left the Annina Nosei gallery, and was showing in the famous Mary Boone gallery in SoHo. On February 10, 1986, he appeared on the cover of The New York Times Magazine in a feature entitled "New Art, New Money: The Marketing of an American Artist". He was a successful artist in this period, but his growing heroin addiction began to interfere with his personal relationships.

When Andy Warhol died on February 22, 1987, Basquiat became increasingly isolated, and his heroin addiction and depression grew more severe. Despite an attempt at sobriety during a trip to Maui, Hawaii, Basquiat died on August 12, 1988, of a heroin overdose at his art studio in Great Jones Street in New York City's NoHo neighborhood. He was 27.

The first retrospective was the "Jean-Michel Basquiat" exhibition at the Whitney Museum of American Art from October 1992 to February 1993. It subsequently traveled to museums in Texas, Iowa, and Alabama from 1993 to 1994. The catalog for this exhibition, edited by Richard Marshall and including several essays of differing styles, was a groundbreaking piece of scholarship into Basquiat's work and still a major source. Another influential showing was the "Basquiat" exhibition at the Brooklyn Museum March–June 2005, which subsequently traveled to Los Angeles and Houston from 2005 to 2006.

Until 2002, the highest money paid for an original work of Basquiat's was $3,302,500, set on November 12, 1998 at Christie's. On May 14, 2002, Basquiat's Profit I (a large piece measuring 86.5"/220 cm by 157.5"/400 cm), owned by drummer Lars Ulrich of the heavy metal band Metallica, was set for auction again at Christie's. It sold for $5,509,500.

On November 12, 2008, at another auction at Christie's, Ulrich sold a 1982 Basquiat piece, Untitled (Boxer), for $13,522,500 to an anonymous telephone bidder.The record price for a Basquiat painting was made on May 15, 2007, when an untitled Basquiat work from 1981 sold at Sotheby's in New York for $14.6 million.