Fry was born in Hampstead, London, the son of Marianne Eve (née Newman) and Alan John Fry, who was an English physicist and inventor. His maternal grandparents were Jewish immigrants from Central Europe, and his mother's aunt and cousins were killed in Auschwitz concentration camp. Fry grew up in the village of Booton near Reepham, Norfolk, having moved from Chesham, Buckinghamshire when very young.

Fry briefly attended Cawston Primary School, Cawston, Norfolk, described later in his 1997 book Moab Is My Washpot before going on to Stouts Hill Preparatory School, and then to Uppingham School, Rutland, where he joined Fircroft house.

He was expelled from Uppingham when he was fifteen, and subsequently from the Paston School. At seventeen, after leaving Norfolk College of Arts and Technology, Fry absconded with a credit card stolen from a family friend, and as a result spent three months in Pucklechurch Prison for fraud.

Following his release he resumed education at Norwich City College, promising administrators that he would study rigorously to sit the Cambridge entrance exams. He passed well enough to gain a scholarship to Queens' College, Cambridge. At Cambridge, Fry gained a degree in English literature, joined the Cambridge Footlights, and appeared on University Challenge. As a member of the Footlights, he also met his future comedy collaborator, Hugh Laurie.

Fry's career in television began with the 1982 broadcasting of The Cellar Tapes, the 1981 Cambridge Footlights Revue written by Fry, Hugh Laurie, Emma Thompson and Tony Slattery. The revue caught the attention of Granada Television, who, keen to replicate the success of the BBC's Not the Nine O'Clock News, hired Fry, Laurie and Thompson to star alongside Ben Elton in There's Nothing To Worry About!

A second series, re-titled Alfresco, was broadcast in 1983 and a third in 1984; it established Fry and Laurie's reputation as a comedy double act. In 1983, the BBC offered them their own show, which became The Crystal Cube, a mixture of science fiction and mock documentary that was axed after the first episode. Undeterred, Fry and Laurie appeared in an episode of The Young Ones in 1984, and Fry in Ben Elton's 1985 series, Happy Families.

Forgiving Fry and Laurie for The Crystal Cube, the BBC commissioned a sketch show in 1986 that was to become A Bit of Fry and Laurie. The programme ran for 26 episodes spanning four series between 1986 and 1995, and was very successful.

During this time Fry starred in Blackadder II as Lord Melchett, Blackadder the Third as the Duke of Wellington, and notably in Blackadder Goes Forth as General Melchett. In 1988, he became a regular contestant on the popular improvisational comedy radio show Whose Line Is It Anyway?. However, when it moved to television, he only appeared three times: twice in the first series and once in the ninth.

Between 1990 and 1993, Fry starred as Jeeves (alongside Hugh Laurie's Bertie Wooster) in Jeeves and Wooster, 23 hour-long adaptations of P.G. Wodehouse's novels and short stories.

In 2003, he began hosting QI, an intellectual panel game that has become one of the most-watched entertainment programmes on British television. In 2006, he won the Rose d'Or award for Best Game Show Host for his work on the series.