Karinthy was born into a bourgeois family in Budapest. He started his writing career as a journalist and remained a writer of short, humorous blurbs until his death. He rose to instant fame in 1912 with the publication of his literary parodies called That's How YOU Write (Így írtok ti). He expanded the collection continuously during the following years. Among his early works, his collection of short stories from school life, Please Sir! (Tanár úr, kérem) also stands out for its grasp of the trials and tribulations of the average schoolboy. Another popular highlight is his translation of A. A. Milne's Winnie the Pooh, that made it a cult book in Hungary.

After the First World War, his writing became more serious and engaged, though never leaving a satirical bent. Karinthy cited Jonathan Swift as a major influence: from this arose the novel Voyage to Faremido (Utazás Faremidóba) and its sequel, Capillaria. Many of his novels and stories also deal with the difficulties of relationships between men and women, partly due to his unhappy second marriage.

Karinthy had a brain tumor for which he was operated upon in Stockholm in 1936. He describes this experience in his autobiographical novel, Journey Round my Skull, (Utazás a koponyám körül), originally published in 1939; a reissue appeared as a NYRB Classic in 2008 with an introduction by neurologist Oliver Sacks. He died two years later, during a holiday at Lake Balaton.

Karinthy was married twice. He married the actress Etel Judik in 1913. The marriage was serene and happy and they had a son called Gábor. Tragically, Etel died very young during the Spanish flu pandemic in 1919. In 1920, he married the psychiatrist Aranka Böhm, with whom he had another son, the writer Ferenc Karinthy. Although he did not speak the language, Karinthy was an ardent supporter of Esperanto, attending Esperanto congresses, and even became president of the Hungarian Esperanto Society in 1932.

He is well known for his dry sense of humor, as he himself noted: "In humor I know no jokes." Just one example for it was his advertising slogan for his book Journey Round my Skull: The Newest Novel of the Famed Tumorist.