Born in Kyoto, Japan, Sakai grew up in Hawaii and studied fine arts at the University of Hawaii. He later attended the Art Center College of Design in Pasadena, California. He and his wife, Sharon, presently reside and work in Pasadena.

He began his career by lettering comic books (notably Groo the Wanderer by Sergio Aragonés and Mark Evanier) and wrote and illustrated The Adventures of Nilson Groundthumper and Hermy; a comic series with a medieval setting, influenced by Sergio Aragones's Groo the Wanderer. The characters first appeared in Albedo #1 in 1984, and were subsequently featured in issues of Critters, GrimJack, Amazing Heroes and Furrlough.

Sakai became famous with the creation of Usagi Yojimbo, the epic saga of Miyamoto Usagi, a samurai rabbit living in late-sixteenth and early-seventeenth-century Japan. First published in 1984, the comic continues to this day, with Sakai as the lone author and nearly-sole artist (Tom Luth serves as the main colorist on the series, and Sergio Aragonés has made two small contributions to the series: the story "Broken Ritual" is based on an idea by Aragonés, and he served as a guest inker for the black and white version of the story "Return to Adachi Plain" that is featured in the Volume 11 trade paperback edition of Usagi Yojimbo). He also created a futuristic spinoff series Space Usagi. His favorite movie is Satomi Hakkenden (1959).

Sakai wrote and illustrated the story "I'm Not In Springfield Anymore!" for Bart Simpson's Treehouse of Horror #7 and illustrated the back cover of Treehouse of Horror #6.

Sakai was the artist for Riblet, the back-up feature in the trade paperback of Stupid, Stupid Rat Tails.

Recently Sakai collaborated with the urban clothing line The Hundreds and created a variety of t-shirts releasing in late November.

• 1990 Parents' Choice Award for "Skillful weaving of facts and legends into his work"
• 1991 Inkpot Award from Comic-Con International: San Diego for "Lifetime Achievement in the Field of Cartooning"
• 1996 Eisner Award for "Best Letterer" (Groo and Usagi Yojimbo)
• 1996 Eisner Award for "Talent Deserving of Wider Recognition" (Usagi Yojimbo)
• 1999 Eisner Award for "Best Serialized Story" (Usagi Yojimbo "Grasscutter")
• 1999 Haxtur Award for "Best Short Story [in Spain]" (Usagi Yojimbo "Noodles" [Spanish Edition])
• 2000 Haxtur Award for "Best Script [in Spain]" (Usagi Yojimbo's "Grasscutter" [Spanish Edition])
• 2001 Ursa Major Award for "Best Anthropomorphic Comic Book or Strip"
• 2002 National Cartoonists Society Comic Book Division Award (Usagi yojimbo)
• 2002 Ursa Major Award for "Best Anthropomorphic Comic Book or Strip"
• 2003 Ursa Major Award for "Best Anthropomorphic Comic Book"
• 2003 La Plumilla de Plata (Silver Inkpen Award) in Mexico for his lifetime achievements and contributions to comic books.
• 2004 Ursa Major Award for "Best Anthropomorphic Other Literary Work" (The Art of Usagi Yojimbo) and "Best Anthropomorphic Comic Book" (Usagi Yojimbo)
• 2005 Ursa Major Award for "Best Anthropomorphic Comic Book" (Usagi Yojimbo)
• 2007 Harvey Award for "Best Letterer"

From 1993 through 2005, Stan Sakai has received twenty-one Eisner Award nominations. He has also been nominated for the Comics Buyer's Guide Award for Favorite Writer in 1999 and 2000.