Born in Poland in 1924 and raised in Vienna, he was interned in detention camps under the Vichy French and fled the Nazi advance by coming to the United States in 1941. He was ordained as an Orthodox rabbi in 1947 within the Chabad Lubavitch Hasidic community while under the leadership of the sixth Lubavitcher Rebbe, Yosef Yitzchok Schneersohn, and served Chabad congregations in Massachusetts and Connecticut. He subsequently earned an M.A. in psychology of religion at Boston University, and a doctorate from the Reform-run Hebrew Union College.

He was initially sent out to speak on college campuses by the Lubavitcher Rebbe, but was expelled from Chabad for praising "the sacramental value of lysergic acid." With subsequent rise of the hippie movement in the 1960s, he moved away from the Chabad lifestyle.

While pursuing a course of study at Boston University (including a class taught by Howard Thurman), he experienced an intellectual and spiritual shift. In 1968, on sabbatical from the Near Eastern and Judaic studies department of the University of Manitoba in Winnipeg, he joined a group of other Jews in founding a havurah (small cooperative congregation) in Somerville, Massachusetts, called Havurat Shalom. He eventually left the Lubavitch movement altogether, and founded his own organization known as B'nai Or, meaning the "Children of Light" in Hebrew, a title he took from the Dead Sea Scrolls writings. During this period he was known to his followers as the "B'nai Or Rebbe", and the rainbow prayer shawl he designed for his group was known as the "B'nai Or tallit". Both the havurah experiment and B'nai Or came to be seen as the early stirrings of the Jewish Renewal movement.

In later years, Shachter-Shalomi held the World Wisdom Chair at The Naropa Institute; he is Professor Emeritus at both Naropa and Temple University. He has also served on the faculty of the Reconstructionist Rabbinical College, Omega, the NICABM and many other major institutions. He is founder of the ALEPH Ordination Programs and ALEPH: Alliance for Jewish Renewal. The seminary he founded has ordained over 80 rabbis and cantor.

Schachter-Shalomi was among the group of rabbis, from a wide range of Jewish denominations, who traveled together to India to meet with the Dalai Lama and discuss diaspora survival with him. (The Tibetans, being exiled from their homeland for three generations now, are facing some of the same assimilation challenges faced by the Jews. The Dalai Lama was interested in knowing how the Jews had survived with their culture intact.) That journey was chronicled in Rodger Kamenetz' book The Jew in the Lotus, now also a documentary film.

Schachter-Shalomi's work reflects several recurring themes, including:

• "Paradigm shifts" within Judaism
• New approaches to halakha (Jewish law) including "psycho-halakha" (as of 2007, called "integral halakha") and doctrines like "eco-kashrut"
• The importance of interfaith dialogue and "deep ecumenism" (meaningful connections between traditions.)
• "Four Worlds" Judaism (integrating the Physical, Emotional, Intellectual, and Spiritual realms)

He is committed to the Gaia hypothesis, to feminism, and to full inclusion of LGBT people within Judaism. His innovations in Jewish worship include chanting prayers in English while retaining the traditional Hebrew cantillation, engaging worshippers in theological dialogue, leading meditation during services and the introduction of spontaneous movement and dance. Many of these techniques have also found their way into the more mainstream Jewish community.

Schachter-Shalomi encourages diversity among his students and urges them to bring their own talents, vision, views and social justice values to the study and practice of Judaism. Based on the Hasidic writings of Rabbi Mordechai Yosef Leiner of Izbitz, he taught that anything, even what others consider sin and heresy could be God's will. His detractors argue that his views are too unconventional and that the theology he promulgates borders on pantheism. His supporters argue that his empowering approach is legitimate, and praise the range of Jewish ritual art, music and liturgical innovation that his work has seeded.

His major academic work, Spiritual Intimacy: A study of Counseling in Hasidim, was the result of his doctoral research into the system of spiritual direction cultivated within Chabad Hasidism. This led to his encouragement of students to study widely in the field of Spiritual Direction (one-on-one counseling) and to innovate contemporary systems to help renew a healthy spirituality in Jewish life. He also pioneered the practice of "spiritual eldering," working with fellow seniors on coming to spiritual terms with aging and becoming mentors for younger adults.

Rabbi Zalman Schachter-Shalomi was honored by the New York Open Center in 1997 for his Spiritual Renewal.

Schachter-Shalomi has produced a large body of articles, books, audio and video recordings. His free-association homiletical style, typical of Hasidic-trained rabbis, and his frequent use of psychological terminology and computer metaphors are appreciated by most first-time readers.

His publications include:

• Fragments of a Future Scroll (1975)
• The First Step (with Donald Gropman, 1983)
• The Dream Assembly: Tales of Rabbi Zalman Schachter-Shalomi Collected and Retold by Howard Schwartz (1988)
• Spiritual Intimacy: A Study of Counseling in Hasidism (1991)
• Gate to the Heart (1993).
• Paradigm Shift (ed. Ellen Singer, 1993)
• From Age-ing to Sage-ing (with Ronald Miller, 1995)
• Wrapped in a Holy Flame (ed. Nataniel Miles-Yepez, 2003)
• Credo of a Modern Kabbalist (with Daniel Siegel, 2005)
• Jewish with Feeling: a guide to Meaningful Jewish Practice (written with Joel Segel, 2005)
• Integral Halachah: Transcending and Including (with Daniel Siegel, 2007)
• Ahron's Heart: The Prayers, Teachings and Letters of Ahrele Roth, a Hasidic Reformer (with Yair Hillel Goelman, 2009)
• A Heart Afire: Stories and Teaching of the Early Hasidic Masters (with Netanel Miles-Yepez, 2009)