Born Jacob Julius Garfinkle to Jewish immigrants David and Hannah Garfinkle, he was sent to a school for problem children in the Bronx after the death of his mother when he was seven years old. It was there, under the guidance of the school's principal, noted educator Angelo Patri, that he was introduced to boxing and acting. He won a scholarship to an acting school hosted by Maria Ouspenskaya, and made his Broadway debut in 1932. He became a member of the Group Theater. The Group's play Golden Boy was written for him by Clifford Odets, but he was passed over for the lead role. He decided to leave Broadway and try his success in Hollywood. In 1938 he received wide critical acclaim and a nomination for the Academy Award for Best Supporting Actor for his role in Four Daughters.

During World War II, Garfield and actress Bette Davis were the driving force behind the building of the Hollywood Canteen, a club offering food and entertainment for American servicemen.

Garfield graduated to leading roles in films such as The Postman Always Rings Twice, Humoresque and Gentleman's Agreement. In 1948 he was nominated for the Academy Award for Best Actor for his starring role in Body and Soul. A strong willed and often verbally, sometimes physically combative individual, he did not hesitate to venture out on his own when the opportunity arose. When his contract with Warner Bros. expired in 1946, instead of signing another contract which was the standard practice, Garfield opted to start his own independent production company. He was among the first Hollywood stars to take this step.

Long involved in liberal politics, Garfield became caught up in the McCarthy Communist scare of the late 1940s and early 1950s. When called to testify before the House on Un-American Activities Committee or HUAC, which was empowered to investigate purported communist infiltration in America, Garfield refused to name names. Though his wife had been a member of the Communist Party, no evidence was ever presented that Garfield had ever been a Communist. However, his forced testimony before the committee damaged his reputation and he was blacklisted by the Hollywood movie studio bosses for the remainder of his career.

With film work scarce because of the blacklist, Garfield returned to Broadway and starred in a 1952 revival of Golden Boy, finally being cast in the lead role denied him years before.

Long-term heart problems, allegedly aggravated by the stress of his blacklisting, led to his early death at the age of 39 on May 21st, 1952. Garfield is interred at Westchester Hills Cemetery in Hastings-on-Hudson, Westchester County, New York.

Two of his children would later become actors themselves.