Tacey was born in Melbourne and grew up in Alice Springs, central Australia. He studied literature, psychology and philosophy, first at Flinders University where he obtained his B.A. in 1975, then at the University of Adelaide where he completed his Ph.D. in 1981. He pursued postgraduate studies in psychoanalysis and culture in the United States. 

Tacey is a frequent commentator on issues of spirituality in Australia, having appeared in programs broadcast by the Australian Broadcasting Commission (ABC) and the Special Broadcasting Service (SBS) in Australia and also Channel Four in the United Kingdom.

Tacey is Associate Professor of English at La Trobe University at the Bundoora campus in Victoria, Australia. His research interest are in the areas of psychoanalysis, psychology, religion, spirituality, the arts and related literary approaches, taking a post-modern perspective with a particular interest in Australian themes, and he is on the editorial boards of several international journals of Jungian studies, including Jung Journal: Culture and Psyche (San Francisco) and Spring (New Orleans).

He is the author of 9 books and over 120 articles and essays. His writings have been translated into numerous languages, including Chinese, Korean, Portuguese and French .