Calderón was born in Madrid. His mother, who was of Flemish descent, died in 1610; his father, an hidalgo of Cantabrian origins who was secretary to the treasury, died in 1615. Calderón was educated at the Jesuit College in Madrid, the Colegio Imperial, with a view to taking orders; but instead, he studied law at Salamanca.

Between 1620 and 1622 Calderón won several poetry contests in honor of St Isidore at Madrid. Calderón's debut as a playwright was Amor, honor y poder, performed on 29 June 1623. This was followed by two other plays that same year: La selva confusa and Los Macabeos. Over the next two decades, Calderón wrote more than 70 plays, the majority of which were secular dramas written for the commercial theatres.

According to one of his biographers, Vera Tassis, Calderón served with the Spanish army in Italy and Flanders between 1625 and 1635; but this statement is contradicted by numerous legal documents indicating that Calderón resided at Madrid during these years. Early in 1629 one of his brothers was stabbed by an actor who took sanctuary in a convent; Calderón, accompanied by another brother and some constables, broke into the cloister and attempted to seize the criminal. (One of the nuns happened to be the daughter of fellow dramatist Lope de Vega.) The fashionable preacher, Hortensio Félix Paravicino, denounced Calderón's actions in a sermon preached before King Philip IV; Calderón retorted by introducing into El príncipe constante, a mocking reference to Paravicino's florid oratory. Calderón was punished with three days of house arrest, and forced to remove the offending line from the play.

By the time Lope de Vega died in 1635, Calderón was recognized as the foremost Spanish dramatist of the age. Calderón had also gained considerable favour in the court, and in 1636-1637 he was made a knight of the order of Santiago by Philip IV, who had already commissioned from him a series of spectacular plays for the royal theatre in the newly built Buen Retiro palace.

On 28 May 1640 he joined a company of mounted cuirassiers recently raised by Gaspar de Guzmán, Count-Duke of Olivares, took part in the Catalonian campaign, and distinguished himself by his gallantry at Tarragona. His health failing, he retired from the army in November 1642, and three years later was awarded a special military pension in recognition of his services in the field.

His biography during the next few years is obscure. His brother, Diego Calderón, died in 1647. A son, Pedro José, was born to Calderón and an unknown woman between 1647 and 1649; the mother died soon after. Calderón committed his son to the care of his nephew, José, son of his brother Diego. Perhaps for reasons relating to these personal trials, Calderón became a tertiary of the order of St Francis in 1650, and then finally joined the priesthood. He was ordained in 1651, and became a priest at San Salvador at Madrid. According to a statement he made a year or two later, he decided to give up writing secular dramas for the commercial theatres.

Though he did not adhere strictly to this resolution, he now wrote mostly mythological plays for the palace theatres, and autos sacramentales--one-act allegories illustrating the mystery of the Eucharist--for performance during the feast of Corpus Christi. In 1662, two of Calderón's autos, Las órdenes militares and Mística y real Babilonia, were the subjects of an inquiry by the Inquisition; the former was censured, its manuscript copies confiscated, and remained condemned until 1671.

Calderón was appointed honorary chaplain to Philip IV in 1663, and continued as chaplain to his successor. In his eighty-first year he wrote his last secular play, Hado y Divisa de Leonido y Marfisa, in honor of Charles II's marriage to Maria Luisa of Orléans. Notwithstanding his position at court and his popularity throughout Spain, his closing years seem to have been passed in relative poverty.

Calderón initiated what has been called the second cycle of Spanish Golden Age theatre. Whereas his predecessor, Lope de Vega, pioneered the dramatic forms and genres of Spanish Golden Age theatre, Calderón polished and perfected them. Whereas Lope's strength lay in the sponteneity and naturalness of his work, Calderón's strength lay in his capacity for poetic beauty, dramatic structure and philosophical depth. Calderón was a perfectionist who often revisited and reworked his plays, even long after they debuted. This perfectionism was not just limited to his own work: many of his plays rework existing plays or scenes by other dramatists, improving their depth, complexity, and unity. (Many European playwrights of the time, such as Molière, Corneille and Shakespeare, reworked old plays in this way.) Calderón excelled above all others in the genre of the "auto sacramental", in which he showed a seemingly inexhaustible capacity to giving new dramatic forms to a given set of theological constructs. Calderón wrote 120 "comedias", 80 "autos sacramentales" and 20 short comedic works called "entremeses". Although his fame dwindled during the 18th century, he was rediscovered in the early 19th century by the German Romantics. Translations of August Wilhelm Schlegel reinvigorated interest in the playwright, who, alongside Shakespeare, subsequently became a banner figure for the German Romantic movement. In subsequent decades, Calderón's was translated into German numerous times, most notably by Johann Dietrich Gries and Joseph von Eichendorff, and found significant reception on the German and Austrian stages under the direction of Goethe, E.T.A. Hoffmann and Joseph Schreyvogel. Later significant adaptations in the German context include Hugo von Hofmannsthal's versions of La vida es sueño and El Gran Teatro del mundo.

Twentieth-century Calderón reception suffered significantly under the influence of Marcelino Menéndez y Pelayo, but a revival of interest in Calderón scholarship can be largely attributed to a British reception, namely through the works of A.A. Parker, A.E. Sloman and more recently Bruce Wardropper.

As stated by Goethe, Calderón tended to write his plays taking special care about their dramatic structure. Hence, he usually reduced the number of scenes in his plays if compared to those of Lope de Vega, so as to avoid any superfluous one and present only those essential to the play, also reducing the number of different meters in his plays for the sake of gaining a greater style uniformity. Although his poetry and plays leaned towards the culteranismo, he usually reduced the level and obscurity of that style by avoiding metaphors and references away from those that uneducated viewers could understand. However, he had a like for symbolism, for example making a fall from a horse a metaphor of a fall into disgrace, the fall representing dishonour; the use of horoscopes or prophecies at the start of the play as a way of making false predictions about the following to occur, symbolizing the utter uncertainty of future. Besides, probably influenced by Cervantes, Calderón realized that any play was but fiction, and that the structure of the baroque play was entirely artificial, so he sometimes makes use of meta-theatrical techniques such as making his characters comment jocosely the clichés the author is using and they are forced to follow. Some of the most common themes of his plays were heavily influenced by his jesuit education. For example, as a reader of Saint Thomas Aquinas and Francisco Suárez, he liked to confront reason against passions, intellect against instinct, or understanding against will. As many writers from the Spanish Golden Age, his plays usually show his vital pessimism, that is only softened by his rationalism and his faith in God; the anguish and distress usually found his oeuvre is better exemplified in one of his most famous plays, Life is a dream, in which Segismundo claims:

¿Qué es la vida? Un frenesí.¿Qué es la vida? Una ficción,una sombra, una ilusión,y el mayor bien es pequeño.¡Que toda la vida es sueño,y los sueños, sueños son!Translation:What is life? A frenzy.What is life? A fiction,A shadow, an illusion,And the greatest profit is small;For all of life is a dream,And dreams, are nothing but dreams.

Indeed, his themes tended to be complex and philosophical, and express complicated states of mind in a manner such as few playwrights have been able to do. As Gracián, Calderón favoured only the deepest human feelings and dilemmas.

Since Calderón's plays were usually represented at the court of the King of Spain, he had access to the most modern techniques regarding scenography. He collaborated with Cosme Lotti in developing complex scenographies that were integrated in some of his plays, specially his most religious-themed ones such as the Autos Sacramentales, becoming extremely complex allegories of moral and religious concepts.

Although not well known to the English speaking world, Calderón plays were first adapted into English during the 17th century. For instance, Samuel Pepys recorded attending to some plays during 1667 which were free translations of some of Calderón's. Percy Bysshe Shelley translated a substantial portion of El Mágico prodigioso. Some of Calderón's works have been translated into English, notably by Denis Florence MacCarthy, Edward Fitzgerald, Roy Campbell, Edwin Honig, Kenneth Muir & Ann L. Mackenzie, Adrian Mitchell, John Clifford and Helen Edmundson. A major new English translation of La vida es sueño was published by the University Press of Colorado in 2004.

• El médico de su honra (The Surgeon of his Honour)
• La vida es sueño (Life is a Dream)
• El Alcalde de Zalamea (The Mayor of Zalamea)
• La Dama duende (The Phantom Lady)
• Casa con dos puertas (The House with Two Doors)
• El Mágico prodigioso (The Mighty Magician)
• La Devoción de la Cruz (Devotion to the Cross)
• El Gran Teatro del mundo (The Great Theatre of the World)
• El Gran Mercado del mundo (The World is a Fair)
• El Pintor de su deshonra (The Painter of His Dishonour)
• El Prodigio de Alemania (The Prodigy of Germany) (in collaboration with Antonio Coello)

Pedro Calderón appears in the 1998 novel The Sun Over Breda by Arturo Perez-Reverte, which takes up the assumption that he served in the Spanish Army at Flanders and depicts him during the sack of Oudkerk by Spanish troops, helping the local librarian save books from the library in the burning Town Hall.