Teller was born in Philadelphia, Pennsylvania. His parents were of Russian Jewish and Cuban descent. Teller only learned of his Jewish ancestry when he was 50 years old. He attended Central High School and Amherst College and taught English and Latin at Lawrence High School in Lawrenceville, New Jersey. Teller He was selected to be a member of the Central High School Hall of Fame in 2001.

As a performer

When Teller, the quiet half of the Penn and Teller showbiz team, made one of his monthly Philadelphia visits to see his parents, Joe and Irene ("Pad" and "Mam"), he was shown 100 unpublished cartoons his father drew in 1939. These "wryly observed scenes of Philadelphia street life," as Teller describes them, are in a loose, sketchy style imitative of the great George Lichty (1905-1983), famed for his long-run syndicated "Grin and Bear It." Teller and his father's "memories began to pump and the stories flowed" after they opened boxes of old letters that Teller read out loud (learning for the first time about a period in his parents' lives that he knew nothing about, such as the fact that his father's name is really Israel Max Teller). Joe's Depression-era hobo adventures led to travels throughout the U.S., Canada and Alaska, and by 1933, he returned to Philadelphia for art study. After Joe and Irene met during evening art classes, they married, and Joe worked half-days as a Philadelphia Inquirer copy boy. When the Inquirer rejected his cartoons, he moved into advertising art just as World War II began. Employing excerpts from letters and postcards, Teller successfully re-creates the world of his parents in a relaxed writing style of light humor and easy (yet highly effective) transitions between the past and present.

Teller does not speak while performing although there are occasional exceptions, usually when the audience is not aware of it. For example, he did the voice of "Mofo the psychic gorilla" in their early Broadway show with the help of a radio mic cupped in his hand. In Zoey's Zoo, an episode of Oh Yeah! Cartoons, he speaks in monosyllables while playing cloned store clerks. Teller's trademark silence originated during his youth, when he earned a living performing magic at college fraternity parties. He found that if he maintained silence throughout his act, spectators refrained from throwing beer and heckling him and focused more on his performance.

Other exceptions to his silent act include instances in which his face is covered or obscured, as when he spoke while covered with a plastic sheet in the series premiere of Penn & Teller: Bullshit!, and when he was interviewed while in shadow for the 2010 History Channel documentary, Houdini: Unlocking the Mystery. Teller appears to have said "Science" in a high-pitched voice in Penn and Teller's appearance on the television show Bill Nye the Science Guy, namely the episode "Light Optics," but he rather mouthed the word while Penn used a ventriloquist technique to make it sound as if Teller had spoken whilst keeping his mouth from moving. Teller also spoke in his 1987 appearance on NBC's Miami Vice (a fourth season episode titled, "Like a Hurricane"), and had a speaking part in the movie The Aristocrats.

Teller began performing with friend Weir Chrisemer as The Ottmar Scheckt Society for the Preservation of Weird and Disgusting Music. Teller met Penn Jillette in 1974, when they joined a three-person act called Asparagus Valley Cultural Society, which played in San Francisco. In 1981, they began performing exclusively together as "Penn & Teller", an act that continues to this day.

As a writer

He collaborated with Jillette on three magic books, and he is also the author of "When I'm Dead All This Will Be Yours!": Joe Teller - A Portrait by His Kid (2000), a biography/memoir of his father. The book features his father's paintings and cartoons which were strongly influenced by George Lichty's Grin and Bear It. The book was favorably reviewed by Publishers Weekly:

Teller is a coauthor of the Nature Reviews Neuroscience paper "Attention and awareness in stage magic: turning tricks into research" from the November 2008 issue.

In 2010 Teller wrote Play Dead, a "throwback to the spook shows of the 1930s and ’40s" that ran September 12 - 24 in Las Vegas before opening Off Broadway in New York. The show stars sideshow performer and magician Todd Robbins.