Karl Menninger was born in Topeka, Kansas. He attended Washburn University, Indiana University, and the University of Wisconsin. He was accepted to Harvard Medical School, where he graduated cum laude in 1917. He held an internship in Kansas City, worked at the Boston Psychopathic Hospital, and taught at Harvard Medical School before finally returning to Topeka in 1919. Together with his father, Charles Frederick Menninger, he founded the Menninger Clinic. By 1925, he had attracted enough investors to build the Menninger Sanitarium. The Menninger Foundation was established in 1941 and quickly became a U.S. psychiatric and psychoanalytic center. After World War II, Menninger was instrumental in founding the Winter Veterans Administration Hospital, in Topeka. It became the largest psychiatric training center in the world.

During his career, Menninger wrote a number of influential books. In his first book, The Human Mind, Menninger argued that psychiatry was a science; and that the mentally ill were only slightly different than healthy individuals. In The Crime of Punishment, Menninger argued that crime was preventable through psychiatric treatment; punishment was a brutal and inefficient relic of the past. He advocated treating offenders like the mentally ill.

He was awarded the Presidential Medal of Freedom, by Jimmy Carter in 1981.