Booth Tarkington was born in Indianapolis, the son of John S. Tarkington and Elizabeth Booth Tarkington. He was named after his maternal uncle Newton Booth, then the governor of California. He first attended Purdue University but graduated from Princeton University in 1893. While at Princeton he was editor of the magazine, "Nassau Literary Magazine" and formed the Triangle Club. He was also voted the most popular man in his class.

He was one of the most popular American novelists of his time, with The Two Vanrevels and Mary's Neck appearing on the annual best-seller lists nine times.

Tarkington's best known work today is The Magnificent Ambersons, due in part to its famous treatment by Orson Welles in 1941 and its frequently favored listing on the Modern Library's list of top-100 novels. It was the second volume in Tarkington's Growth trilogy, which traced the growth of the United States through the decline of the once-powerful and aristocratic Amberson family dynasty, contrasted against the rise of industrial tycoons and "new money" families in the economic boom years after the Civil War leading up to WWI.

Tarkington donated substantially to Purdue University and has been recognized for his philanthropy. Tarkington Hall, an all-men's residence hall at Purdue, is named in honor of him.