He was "Hollywood" royalty, the son of B.P. Schulberg, head of Paramount Pictures and Adeline Jafee-Schulberg, sister to agent/film producer Sam Jaffe. Budd Schulberg is best known for his 1941 novel What Makes Sammy Run, his 1947 novel The Harder They Fall, his 1954 Academy-award-winning screenplay for On the Waterfront, and his 1957 screenplay A Face in the Crowd.

He encountered political controversy in 1951 when screenwriter Richard Collins, testifying to the House Un-American Activities Committee, named Schulberg as a former member of the Communist Party. Schulberg immediately volunteered to testify and appeared as a friendly witness. He testified that Party members had sought to influence the content of What Makes Sammy Run and "named names" of other alleged Hollywood communists. His testimony saw many of his colleagues added to the Hollywood blacklist.

Schulberg attended Deerfield Academy and Dartmouth College. In 1939 he collaborated on the screenplay for Winter Carnival, a light comedy set at Dartmouth. One of his collaborators was F. Scott Fitzgerald, who was at the time attempting to pursue a Hollywood career. In 1950 Schulberg published a novel, The Disenchanted, about a young screenwriter who collaborates on a screenplay about a college winter festival with a famous novelist at the nadir of his career. The novelist is portrayed as a tragic but contemptible figure, with whom the young screenwriter becomes disillusioned. According to the New York Times, it was the tenth bestselling novel in the United States in 1950.

In 1965, after a devastating riot had ripped apart the fabric of the Watts community in Los Angeles, Schulberg formed the Watts Writers Workshop as an attempt to ameliorate frustrations and bring artistic training to the economically impoverished district.

He is married to his fourth wife, Betsey, and has two children, Benn and Jessica. He resides in Westhampton, Long Island, New York.