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Nicolson was born in Tehran, Persia, the younger son of diplomat Arthur Nicolson, 1st Baron Carnock. He was educated at Wellington College and Balliol College, Oxford.

In 1909 he joined HM Diplomatic Service. He served as attaché at Madrid from February to September 1911, and then Third Secretary at Constantinople from January 1912 to October 1914. During the First World War, he served at the Foreign Office in London, during which time he was promoted Second Secretary. He served in a junior capacity in the Paris Peace Conference in 1919, for which he was appointed Companion of the Order of St Michael and St George (CMG) in the 1920 New Year Honours.

Promoted First Secretary in 1920, he was appointed private secretary to Sir Eric Drummond, first Secretary-General of the League of Nations, but was recalled to the Foreign Office in June 1920.

In 1925, he was promoted Counsellor and posted to Tehran as Chargé d'affaires. However, in Summer 1927 he was recalled to London and demoted to First Secretary for criticising his Minister, Sir Percy Loraine, in a dispatch. He was posted to Berlin as Chargé d'affaires in 1928. He was promoted Counsellor again, but resigned from the Diplomatic Service in September 1929.

From 1930 to 1931, Nicolson wrote for the Evening Standard, but found it increasingly tedious.

In 1931, he joined Sir Oswald Mosley and his recently formed New Party. He stood unsuccessfully for Parliament for the Combined English Universities in the general election that year and edited the party newspaper, Action. He ceased to support Mosley when the latter formed the British Union of Fascists the following year.

Nicolson entered the House of Commons as National Labour Member of Parliament (MP) for Leicester West in the 1935 election. In the latter half of the 1930s he was among a relatively small number of MPs who alerted the country to the threat of Fascism. More a follower of Anthony Eden in this regard than of Winston Churchill, he nevertheless was a friend (though not an intimate) of Churchill, and often supported his efforts in the Commons to stiffen British resolve and support rearmament.

He became Parliamentary Secretary at the Ministry of Information in Churchill's 1940 war time government of national unity, serving under Cabinet member Duff Cooper for approximately a year; thereafter he was a well-respected backbencher, especially on foreign policy issues given his early and prominent diplomatic career. From 1941 to 1946 he was also on the Board of Governors of the BBC. He lost his seat in the 1945 election. Having joined the Labour Party, he stood in the Croydon North by-election in 1948, but lost once again.

In 1913, he married the writer Vita Sackville-West, who encouraged his literary ambitions. He published a biography of French poet Paul Verlaine in 1921, to be followed by studies of other literary figures such as Tennyson, Byron, Swinburne and Sainte-Beuve. In 1933, he wrote an account of the Paris Peace Conference entitled Peacemaking 1919.

Nicolson and his wife practiced what today would be called an open marriage. They each had a number of same-sex affairs, and once Harold had to follow Vita to France, where she had "eloped" with Violet Trefusis, to try to win her back. However, they remained happy together — in fact, they were famously devoted to each other, writing almost every day when they were separated, for example, because of long diplomatic postings abroad. Eventually, he gave up diplomacy, partly so they could live together in England. They had two sons, Nigel, also a politician and writer, and Benedict, an art historian.

In the 1930s, he and his wife acquired and moved to Sissinghurst Castle, near Cranbrook in Kent, the county known as the garden of England. There they created the renowned gardens that are now run by the National Trust.

After Nicolson's last attempt to enter Parliament, he continued with an extensive social schedule and his programme of writing, which included books, book reviews, and a weekly column for The Spectator. He was appointed Knight Commander of the Royal Victorian Order (KCVO) in 1953, as a reward for writing the official biography of George V, which had been published in the previous year.

His younger son, the publisher and writer Nigel Nicolson, published works by and about his parents, including Portrait of a Marriage (frankly covering his parents' bisexuality), their correspondence, and Nicolson's diary. The latter is one of the pre-eminent British diaries of the 20th century and an invaluable source on British political history from 1930 through the 1950s, particularly in regard to the run-up to World War II and the war itself: Nicolson served in high enough echelons to write of the workings of the circles of power and the day-to-day unfolding of great events from, as it were, a medium distance. (His fellow parliamentarian Robert Bernays aptly characterized Nicolson as being "...a national figure of the second degree.") It is perhaps his diary, of all of his voluminous oeuvre, for which Harold Nicolson will be most remembered, as the author was variously an acquaintance, associate, friend, or intimate to such figures as Ramsay MacDonald, David Lloyd George, Duff Cooper, Charles de Gaulle, Anthony Eden and Winston Churchill, along with a host of literary and artistic figures.

There is a brown "blue plaque" commemorating him and Vita Sackville-West on their house in Ebury Street, London SW1.