While attending Boston University as a young man, he also worked as a magician and mentalist, impressing the head of his department (among others) with his palmistry. Hyman at one point believed that 'reading' the lines on a person's palm could provide insights into their nature, but later discovered that the person's reaction to the reading had little to do with the actual lines on the palm. This led to his interest in psychology. He obtained a doctorate in psychology from Johns Hopkins University in 1953, and then taught at Harvard for five years. He also became an expert in statistical method. Along with other notable skeptics like Paul Kurtz, he was a founding member of the Committee for the Scientific Investigation of Claims of the Paranormal (CSICOP), which publishes the Skeptical Inquirer.

Aside from his scholarly publications and consultation with the U.S. Department of Defense in scrutinizing psychic research, one of his most popular articles is thirteen points to help you "amaze your friends with your new found psychic powers!", a guide to cold reading. The guide exploits what fascinated him in his academic research in cognitive psychology, that much deception is self-deception. He has investigated dowsing in the United States and wrote a book on the subject. He is one of the foremost skeptical experts on the Ganzfeld experiment.

Dr. Hyman's prestidigitational skills (which he calls "manipulating perception") have earned him the cover of The Linking Ring, the magazine of the International Brotherhood of Magicians of which he has been a member for over 35 years.

Dr. Hyman was close friends with Barry Beyerstein and together they founded an annual workshop in 1992 in Eugene, Oregon called Skeptic's Toolbox which is still being held.

Hyman retired in 1998 but continues to give talks and investigate paranormal claims. In July 2009 he appeared at The Amaz!ng Meeting 7 in Las Vegas, Nevada. He is working on two books: How Smart People Go Wrong: Cognition and Human Error and Parapsychology’s Achilles’ Heel: Consistent Inconsistency.