Niebuhr was born in Wright City, Missouri, USA, the son of a liberally minded German Evangelical pastor, Gustav, and the brother of Helmut Richard Niebuhr. Niebuhr decided to follow in his father's footsteps and enter the ministry. He attended Elmhurst College, Illinois (where today stands a large statue of him), graduating in 1910, subsequently going to Eden Seminary, St. Louis, Missouri. Finally he attended Yale University where he received his Bachelor of Divinity Degree in 1914 and was a member of Alpha Sigma Phi Fraternity. In 1915, he was ordained a pastor. The German Evangelical mission board sent him to serve in Detroit. The congregation numbered 65 on his arrival and grew to nearly 700 when he left. The increase was partly due to the tremendous growth of the automobile industry which was centered in that region.

During his pastorate, Niebuhr was troubled by the demoralizing effects of industrialism on the workers. He became an outspoken critic of Henry Ford and allowed union organizers to use his pulpit to expound their message of worker's rights. Niebuhr documented inhumane conditions created by the assembly lines and erratic employment practices.

In 1923 Niebuhr visited Europe to meet with intellectuals and theologians. The conditions he saw in Germany under the French occupation dismayed Niebuhr and reinforced the pacifist views he adopted in disgust after World War I.

In 1928, Niebuhr became Professor of Practical Theology at Union Theological Seminary in New York where he remained until 1960. Before arriving at the seminary, Niebuhr captured the meaning of his personal experience at his Detroit church in his book Leaves From the Notebook of a Tamed Cynic. While teaching theology at Union Theological Seminary, Niebuhr influenced Dietrich Bonhoeffer of the anti-Nazi Confessing Church.

In 1931 he married the English theologian Ursula Kessel-Compton; they had a son and a daughter.

During the 1930s Niebuhr was a prominent leader of the militant faction of the Socialist Party of America, promoting assent to the United front agenda of the Communist Party USA, a position in sharp contrast to that which would distinguish him later in his career. According to the autobiography of his factional opponent Louis Waldman, Niebuhr even led military drill exercises among the young members.

During the outbreak of World War II, the pacifist leanings of his liberal roots were brought under challenge, and he began to distance himself from the pacifism of his more liberal colleagues, becoming a staunch advocate for the war. Niebuhr soon left the Fellowship of Reconciliation, a peace oriented group of theologians and ministers, and became one of their harshest critics. This departure from his peers evolved into a movement known as Christian Realism and Niebuhr is acknowledged as its primary advocate. Christian Realism provided a more tough-minded approach to politics than the idealism that was held by many of Niebuhr's contemporaries. Within the framework of Christian Realism, Niebuhr became a supporter of US action in World War II, anti-communism, and the development of nuclear weapons.

In 1952, he wrote The Irony of American History in which he shared with his readers the various struggles (political, ideological, moral and religious) in which he participated. His writings reflect a penetrating criticism of the social gospel liberalism of his youth and his search for alternatives. For a while he tried to synthesize various elements of Marxism and Christianity. Both his political experience and his deepening Christian values, however, caused him to abandon the work in favor of an ideology he called Christian Realism. These views meshed the Augustinianism of the Reformation with his own hard-won political wisdom. His concepts were crystallized in the Gifford Lectures of Edinburgh University in 1940 as The Nature and Destiny of Man, which is his magnum opus, and comes as close as he ever did to a systematic presentation of his theology.

Niebuhr made insightful observations on the human condition, emphasizing its social and political aspects. No other theologian has made such a deep impact upon the social sciences. For over two decades his ideas were the most important influence on theology in American seminaries.

The writings of Niebuhr are placed squarely in the middle of a very painful time in the history of the world and of America. Having suffered one World War and a Great Depression, Niebuhr wrote about the injustice of humanity and the need for people to tear down the systems that increased the injustice in the world. In the rise of fascism and the horrors of World War II in Europe, Niebuhr saw an evil which demanded opposition by force, even by Christians. Taking this lesson further, he wrote concerning the need for a form of democracy that would empower people and rid the world of the human sin of lording power over others. In the beginnings of his work as a vocal social justice proponent, he was a strong democratic socialist. Railing against Franklin Delano Roosevelt’s New Deal as being unattainable, after the war he saw his writing as too idealistic and began to fall into line with the New Deal and the Vital Center of the Democratic Party. Niebuhr’s work was a great voice within the rising tide of welfare capitalism.

Niebuhr was read widely by Christian leaders in the postwar years, most famously by Martin Luther King, Jr., and influenced the evolving postwar American national identity. His work inspired an American psyche that evoked a mythological worker of justice in the world—a notion that he stressed was a vision of what might be, not a description of America at the time. Niebuhr saw America as moving in the direction of justice, despite failures of racial equality and foreign policy in Vietnam. Writing about class equality, he said "We have attained a certain equilibrium in economic society by setting organized power against organized power".

He received the Presidential Medal of Freedom in 1964.

Niebuhr was the author of the Serenity Prayer used by Alcoholics Anonymous (in a slightly different form from the version he wrote). An Alcoholics Anonymous website reports: "What is undisputed is the claim of authorship by the theologian Dr. Rheinhold Niebuhr, who recounted to interviewers on several occasions that he had written the prayer as a 'tag line' to a sermon he had delivered on Practical Christianity. Yet even Dr. Niebuhr added at least a touch of doubt to his claim, when he told one interviewer, 'Of course, it may have been spooking around for years, even centuries, but I don't think so. I honestly do believe that I wrote it myself.'"

His authorship was confirmed in detail by Elisabeth Sifton in her book The Serenity Prayer (2003)

In Manhattan, the section of West 120th Street between Broadway and Riverside Drive, the locale of Union Theological Seminary, is named Reinhold Niebuhr Place in his honor.

So who wrote the serenity prayer and where did it surface first?