Eszterhas was born in Csákánydoroszló, Hungary, the son of Mária (née Bíró) and István Chrisht. He was raised as a young child in a refugee camp in Austria. Eventually his parents moved to New York City, and then to poor immigrant neighborhoods in Cleveland, where he spent most of his childhood. His mother had a mental illness which estranged her from the family while he was entering adolescence. His father was a Roman Catholic newspaper editor and author.

Eszterhas attended Ohio University, but did not graduate.

He was a reporter with the Cleveland Plain Dealer, where he gained his first touch of notoriety due to his handling of color photos of Vietnam's My Lai Massacre, which depicted American soldiers murdering Vietnamese civilians. Although he was annoyed at his newspaper’s apparent lack of belief in the authenticity of the photos, the paper permitted Eszterhas to try and sell them for $125,000. Some media outlets, however, used the photos without permission, causing the photos to decline in value. He ended up receiving only $20,000 from Life magazine.

Another touch of notoriety concerned a Cleveland Plain Dealer editor who singlehandedly sailed a small sail boat from the United States to England. The Plain Dealer would not sponsor the editor's trip. However, as the gentleman neared the culmination of his trip, the Plain Dealer chartered an airplane to fly low and drop "Cleveland Plain Dealer" sweat shirts to the editor. According to the account Eszterhas wrote, the editor retrieved the sweat shirts and when he saw what they were, tossed them overboard. Eszterhas was subsequently relieved of his duties at the newspaper.

Eszterhas was a senior editor from 1971 to 1975 for Rolling Stone. He became a National Book Award nominee for his nonfiction work Charlie Simpson's Apocalypse in 1974.

Eszterhas' first screenplay to be produced wasF.I.S.T., directed by Norman Jewison, and although it was stated by star Sylvester Stallone that he himself rewrote the majority of the film, Eszterhas denies this assertion. He then contributed to the script of 1983's highly successful Flashdance. Other films he wrote include Jagged Edge, Jade, Betrayed, and Sliver.

Eszterhas re-entered the limelight in 1992, writing the screenplay for the major hit Basic Instinct.

In 1995, he wrote Showgirls. His screenplay won that year's Golden Raspberry Award for Worst Screenplay. Eszterhas' own explanation of the failure of that film, according to his recent book was that it was ruined by the sexual affair between its director and its female star. The film enjoyed success on the home video market, generating more than $100 million from video rentals and became one of MGM's top 20 all-time bestsellers.

He turned his eye to producing following Basic Instinct, making two films in 1997, both of which he wrote. The first one, Telling Lies in America, was generally well-regarded by critics and audiences, but was not a great box office success. The second was the flop An Alan Smithee Film Burn Hollywood Burn, which won several Golden Raspberry awards, of which Eszterhas won two: another Worst Screenplay and one for Worst Supporting Actor (a cameo in which a caption described him as a "penile implant").

None of Eszterhas' screenplays were produced from 1997 to 2006; his latest project, Children of Glory, was released in 2006 (it was also entered by invitation in the official section of 2007 Berlin Film Festival).

He has written several best-selling books, including American Rhapsody, an autobiography about politics in Hollywood which superimposes his life as a young World War II refugee in America on his life as a powerful Hollywood player. A third book, The Devil's Guide to Hollywood, was published in September 2006.

His latest book, Crossbearer: A Memoir of Faith, was published on September 2, 2008 by St. Martin's Press. The release tells the story of his return to the practice of Roman Catholicism and his newfound devotion to God and family.