Wagner was born in Madison, Wisconsin, to Morton Wagner and Bernice Maletz. At the age of four, his family moved to San Francisco, then to Los Angeles four years later. He attended Beverly Vista Elementary School in Beverly Hills, CA. until the 8th grade. He attended Beverly Hills High School but dropped out in his junior year. He worked in bookstores, drove an ambulance for Schaefer Ambulance Service, and drove a limousine at the Beverly Hills Hotel. In 1989, he married actress Rebecca De Mornay. They later divorced.

Wagner began writing articles for magazines, and writing scripts. His first screenplay, Young Lust, was produced by Robert Stigwood but was never released. It was that experience that ultimately led him to write his modern take on F. Scott Fitzgerald's "Pat Hobby" short stories (about an alcoholic screenwriter who never gets ahead); Wagner self-published Force Majeure: The Bud Wiggins Stories, selling 1,000 copies out of West Hollywood's famed Book Soup. The book was well reviewed and led to a publishing deal with Random House. He is currently published by Simon and Schuster. He has written essays and op-ed pieces for The New Yorker, The New York Times, Art Forum and Vanity Fair, and his novel, The Chrysanthemum Palace, was a PEN/Faulkner finalist in 2006. He has also written essays and prefaces for books by the photographers William Eggleston and Manuel Alvarez Bravo, and the painters Ed Ruscha and Richard Prince.

After interviewing Carlos Castaneda for Details Magazine in 1994 , Wagner became part of Castaneda's inner circle under the assumed name of Lorenzo Drake. He directed the first videos on Tensegrity for Cleargreen and married the mystic, Carol Tiggs, in 1995. Wagner continues to be close to the group since Castaneda's death in 1998. His first autobiographical piece about his experience with the shaman and author Castaneda appeared in the Fall 2007 issue of Tricycle magazine. (After Wagner's novel Memorial was favorably reviewed in that magazine by a Buddhist monk, Wagner wrote its editor, James Shaheen, a letter of thank you, and Shaheen invited him to contribute an essay about Castaneda.) More recently, Wagner studied with Indian guru Ramesh Balsekar. He was most recently the executive producer and writer of Tracey Ullman's State of the Union series on Showtime, and is working with David Cronenberg, who plans to direct Wagner's original screenplay, Maps to the Stars.