Born Henri Leonard de Fiennes in Sacramento, California, he was the son of American actor and stage manager, Rhody Hathaway (1868-1944) and a Hungarian-born Belgian aristocrat, Marquise Lillie de Fiennes (1876-1938) who acted under the name, Jean Hathaway. This branch of the de Fiennes family came to America in the 1800s on behalf of King Leopold I of Belgium and was part of the negotiations with the former Belgian Prime Minister, Charles Rogier (1800-1885) to secure the 1862 treaty between Belgium and what was then known as the Sandwich Islands but is now called Hawaii.

In 1925, Hathaway began working in silent films as an assistant to notable directors such as Victor Fleming and Josef von Sternberg and made the transition to sound with them. He was the assistant director to Fred Niblo in the acclaimed 1925 version of Ben-Hur starring Francis X. Bushman and Ramon Novarro. During the remainder of the 1920s, Hathaway learned his craft as an assistant, helping direct future stars such as Gary Cooper, Marlene Dietrich, Adolphe Menjou, Fay Wray, Walter Huston, Clara Bow, and Noah Beery.

Henry Hathaway made his directorial debut in 1932 with a Western film production, Heritage of the Desert. Based on a Zane Grey novel, Hathaway gave Randolph Scott his first starring role in film that led to a lengthy career for Scott as a cowboy star. Hathaway too, was a fan of stories of the settling of the American West and would make a number of films involving the subject. In 1935, he directed the acclaimed Lives of a Bengal Lancer which received several Academy Award nominations including Best Picture and for which Hathaway was nominated for the Academy Award for Directing.

During the 1940s Hathaway began making films in the pseudodocumentary or semidocumentary vein, often intersperse with the then popular film noir style; these included The House on 92nd Street for which he was nominated for a best director award by the New York Film Critics Circle and his 1948 film, Call Northside 777, in which Hathaway demonstrated one of the first on-screen uses of a Fax machine. His 1953 film noir thriller titled Niagara starred the up-and-coming Marilyn Monroe.

In the 1960s Hathaway returned to a genre he cared a great deal about, directing John Wayne in several notable Western films including his Oscar winning performance in True Grit. Hathaway also directed 1966's Nevada Smith, another Western starring Steve McQueen that was based on the Harold Robbins novel The Carpetbaggers.

Henry Hathaway made his 65th and last film in 1974. He died in 1985 in Hollywood and was buried in Holy Cross Cemetery in Culver City, California. Although an often overlooked director, his body of work earned him a star on the Hollywood Walk of Fame at 1638 Vine Street.