Bennett Cerf was born and brought up in New York City in a Jewish family of Alsatia and German descent. His father, Gustave Cerf, was a lithographer, and his mother, Frederika Wise, was an heiress to a tobacco-distribution fortune.

Cerf attended Townsend Harris High School, the same public school as composer Richard Rodgers, the publisher Richard Simon, and the playwright Howard Dietz, and he spent his teenage years at 790 Riverside Drive; this apartment building in Washington Heights was home to two other friends who became prominent as adults, Dietz and the Hearst newspapers financial editor Merryle Rukeyser. He received his B.A. from Columbia University in 1919 and his Litt.B. in 1920 from its School of Journalism. On graduating, he worked briefly as a reporter for the New York Herald Tribune, and for some time in a Wall Street brokerage, before becoming vice president of the Boni & Liveright publishing house.

In 1925, Cerf formed a partnership with his friend Donald Klopfer. The two bought the rights to the Modern Library from Boni and Liveright and went into business for themselves. They made the series quite successful and, in 1927, commenced to publish general trade books which they had selected "at random." Thus began their formidable publishing business, which in time they named Random House. It used as its logo a little house drawn by Cerf's friend Rockwell Kent.

Cerf's talent in building and maintaining relationships brought contracts with writers such as William Faulkner, John O'Hara, Eugene O'Neill, James Michener, Truman Capote, Theodor Seuss Geisel, and others, who were among the greatest writers of the day and who supported Random House just as Random House supported them. He published Atlas Shrugged, written by Ayn Rand. Even though he vehemently disagreed with her philosophy of Objectivism, they became lifelong friends.

In 1933, Cerf won United States v. One Book Called Ulysses, a landmark court case against government censorship, and published James Joyce's unabridged Ulysses for the first time in the United States. Critical reviews of the book were pasted into a special copy, which was duly imported and seized by U.S. Customs. Cerf later presented the book to Columbia University.

In 1944, Cerf published the first of his collection of jokebooks, Try and Stop Me, with illustrations by Carl Rose. A second book, Shake Well Before Using, was published in 1949.

In the early 1950s, while maintaining a Manhattan residence, Cerf managed to acquire inexpensively an estate at Mount Kisco, New York, which became his country home for the rest of his life. Cerf married actress Sylvia Sidney on October 1, 1935, but the couple divorced on April 9, 1936. He was married to former Hollywood actress Phyllis Fraser, a cousin of Ginger Rogers, from September 17, 1940 until his death. They had two sons, Christopher and Jonathan.

In 1959, Maco Magazine Corporation published what has since become known as "The Cream of the Master's Crop." This groundbreaking compilation of jokes, gags, stories, puns, and wit became recognized, in time, as the essence of Bennett Cerf and his humor.

Cerf began appearing weekly on What's My Line? in 1951 and continued until the show's CBS network end in 1967. Cerf continued to appear occasionally on the Viacom syndicated version with Arlene Francis until his death. Cerf was known as "Bennett Snerf" in a Sesame Street puppet parody of What's My Line?. During his time on What's My Line?, Cerf received an honorary degree from the University of Puget Sound.

Late in life he suffered the embarrassment of an exposé, written by Jessica Mitford, and published in the June 1970 Atlantic Monthly, denouncing the business practices of the Famous Writers School, which Cerf had founded.

Cerf was portrayed in the film Infamous (2006) by Peter Bogdanovich. S.J. Perelman's feuilleton "No Dearth of Mirth, Fill Out the Coupon" describes Perelman's fictionalized encounter with a jokebook publisher named Barnaby Chirp who is a caricature of Cerf. Another caricature of Cerf, named Harry Hubris and portrayed by Bert Lahr, appears in Perelman's 1962 play The Beauty Part.

Cerf died in Mount Kisco, New York, on August 27, 1971, at the age of 73. In 1977, Random House, the company that Cerf had co-founded, posthumously published his autobiography, which he had titled At Random: The Reminiscences of Bennett Cerf. A street (Cerf Lane) off of Croton Avenue bears his name.