Bensaïd was born in Toulouse, to a father who was a Sephardic Jew from Algeria, and who had moved from Oran, where he met Bensaïd's mother, to Vichy Toulouse. In response to the 8 February 1962 Charonne massacre of Algerians in Paris, Bensaïd joined the Union of Communist Students. Irritated by the party orthodoxy he swiftly became part of a left opposition within the union, and was among the dissidents expelled from the party in 1966.

In 1966 Bensaïd began studying at the École normale supérieure de Saint-Cloud, where he helped found the Jeunesse Communiste Révolutionnaire, which became the Ligue Communiste Révolutionnaire (LCR). With Daniel Cohn-Bendit he helped to found the Mouvement du 22 Mars (Movement of 22 March) which was involved in the protests of May 1968 in France.

He became a leading theorist of the LCR and the United Secretariat of the Fourth International, and a professor of philosophy at the University of Paris-VIII. He was also a Fellow at the International Institute for Research and Education. Upon his death, Tariq Ali described him as "France's leading Marxist public intellectual, much in demand on talkshows and writing essays and reviews in Le Monde and Libération." He was known for his studies of Walter Benjamin and Karl Marx, and a recent analysis of French postmodernism.

He died of cancer arising from the side effects of drugs used to treat AIDS, which he had had for the previous 16 years.

Bensaïd and the Fourth International tradition have come under attack from sections of the far left for the strategy they have advanced in the social movements; in particular, for seeing reform and revolution as a false dichotomy, and proposing the formation of "broad parties". In one such critique, Luke Cooper, of the journal Fifth International, criticised Bensaïd for arguing that...in certain, specific circumstances...it maybe permissible to enter a capitalist government, and seek to use the existing state as an instrument of revolutionary transformation. Bensaïd also debated revolutionary strategy with other Fourth International members, and the British Socialist Workers Party's Alex Callinicos.