He was born in the town of Pescina in the Abruzzo region and lost many family members, including his mother, in the 1915 Avezzano earthquake. His father had died in 1911. Silone joined the Young Socialists group of the Italian Socialist Party (PSI), rising to be their leader.

He was a founding member of the breakaway Italian Communist Party (PCI) in 1921, and became one of its covert leaders during the Fascist regime. Ignazio's brother Romolo Tranquilli was arrested in 1928 for being a member of the PCI, and he died in prison in 1931 as a result of the severe beatings he received.

Ignazio Silone left Italy in 1927 on a mission to the Soviet Union, and settled in Switzerland in 1930. While there, he declared his opposition to Joseph Stalin, and the leadership of Comintern; consequently, he was expelled from the PCI. He suffered from tuberculosis and severe clinical depression, and spent nearly a year in Swiss clinics. As he recovered, Silone began writing his first novel, Fontamara, published in German translation in 1933. The English edition, first published by Penguin Books in September 1934, went through frequent reprintings during the 1930s, with the events of the Spanish Civil War and the escalation towards the outbreak of World War II increasing attention for its subject material.

The United States Army printed unauthorised versions of Fontamara and Bread and Wine and distributed them to the Italians during the liberation of Italy after 1943. These two books together with The Seed Beneath the Snow form the Abruzzo Trilogy. Silone returned to Italy only in 1944, and two years later he was elected as a PSI deputy.

In the course of World War II, he had become the leader of a clandestine Socialist organization operating from Switzerland to support resistance groups in Nazi Germany-occupied Northern Italy. He also became an Office of Strategic Services (OSS) agent under the pseudonym of Len.

Following his contribution to anti-communist anthology The God That Failed (1949), Silone joined the Congress of Cultural Freedom and edited Tempo Presente. In 1967, with the discovery that the journal received secret funds from the United States Central Intelligence Agency, Silone resigned and devoted all his energies to the writing of novels and autobiographical essays.

In 1969 he was awarded the Jerusalem Prize, a literary award for writers who deal with the theme of individual freedom and society. In 1971 he was the recipient of the prestigious Prix mondial Cino Del Duca.

Silone was married to Darina Laracy, an Irish student of Italian literature. He died in Geneva in 1978.

Italian historians Dario Biocca and Mauro Canali found documents which, they claimed, 'proved' that Silone acted as an informant for the Fascist police from 1922 until 1930. The two historians published the results of their research in a work titled L'informatore. Silone, i comunisti e la polizia. In spite of bitter controversy in the Italian press, Biocca's and Canali's work proved to be substantiated and was reviewed in a positive light by the London Review of Books, The Times Literary Supplement, The New Yorker, The Nation, New Left Review and others.

Italian historian Giuseppe Tamburrano, however, maintains that some police documents produced by Biocca and Canali cannot be attributed to Silone.

A 2005 biography by Biocca also includes documents showing Silone's involvement with the American intelligence during and after the World War, ultimately suggesting that Silone's political stands (as well as extensive literary work) should be reconsidered in light of a more complex personality and a deep sense of remorse.

• Fontamara (1931)
• Fascism - Its Origin and Development (1934)
• Bread and Wine (1937) (original Italian title: Pane e Vino)
• The School for Dictators (1938)
• The Living Thoughts of Mazzini (1939)
• The Seed Beneath the Snow (1940)
• The God That Failed (1949)
• Emergency Exit (1951)
• Handful of Blackberries (1952)
• Wine and Bread (1955 revised version of the 1937 title) (orig. Italian Vino e pane)
• Luca's Secret (1956) (orig. Italian Il Segreto di Luca)
• Story of a Humble Christian (1968) (orig. Italian L'avventura di un povero cristiano)

Three of Silone's poems were included by Hanns Eisler in his Deutsche Sinfonie, along with poetry by Bertolt Brecht.