Wu was born in Shanghai. He came from a wealthy family; his father was a banker, and his mother was descended from landlords. He recalls his childhood as being one of "peace and pleasure" but these fortunes changed after the end of the Chinese Civil War in 1949: "During my teen-age years, my father lost all his properties. We had money problems. The government took over all the property in the country. We even had to sell my piano."

Wu studied at the Geology Institute in Beijing, where he was first arrested in 1956 for criticizing the Communist Party during the brief period of liberalization in China known as the Hundred Flowers Campaign. He has also claimed that he protested the Soviet invasion of Hungary in 1956. In 1960 he was sent to the laogai ("reform through labor"), the Chinese labor camp system, as a "counterrevolutionary rightist." He was imprisoned for 19 years in 12 different camps mining coal, building roads, clearing land, and planting and harvesting crops. According to his own accounts, he was beaten, tortured and nearly starved to death, and witnessed the deaths of many other prisoners from brutality, starvation, and suicide.

Released in 1979 in the liberalization which followed the death of Mao Zedong, Wu left China and went to the United States, where he became a visiting professor. There he began writing about his experiences in China. In 1992 he resigned his academic post and became a human rights activist. He established the Laogai Research Foundation, a non-profit research and public education organization which was financed by the AFL-CIO and in fact was based there in the early years. The work of the foundation is recognized as a leading source of information on China's labor camps, and was instrumental in proving that organs of executed criminals were used for organ transplants..

In 1995 Wu, by then a U.S. citizen, was arrested as he tried to enter China with valid, legal documentation. He was held by the Chinese government for 66 days before he was convicted for "stealing state secrets." He was sentenced to 15 years in prison, but was instead immediately deported from China. He attributes his release to an international campaign launched on his behalf.

He was awarded the Courage of Conscience Award by the Peace Abbey in Sherborn, Massachusetts, on September 14, 1995 for his extraordinary sacrifices and commitment to exposing human rights violations in his motherland China. The Peace Abbey Courage of Conscience Recipients List

In November 2008, Wu opened the Laogai Museum in Washington, D.C., calling it the first ever United States museum to directly address human rights in China.

Wu received the Freedom Award from the Hungarian Freedom Fighters' Federation in 1991. In 1994 he received the first Martin Ennals Award for Human Rights Defenders. In 1996, he was awarded the Medal of Freedom from the Dutch World War II Resistance Foundation. He also received honorary degrees from St. Louis University and the American University of Paris in 1996.

Wu is currently the Executive Director of the Laogai Research Foundation and the China Information Center. He is also a member of the International Council of the New York-based Human Rights Foundation.

In 2007, Wu recently criticized the selection of a Chinese sculptor, Lei Yixin, as the lead sculptor for the Martin Luther King, Jr. National Memorial based on the fact that Mr. Lei had also carved statues celebrating Mao Zedong.

Wu also wrote a response to Simon Wiesenthal's book The Sunflower. Wu briefly recounts his story while imprisoned, and responds to the question posed at the end of the book.