Costain was born in Brantford, Ontario to John Herbert Costain and Mary Schultz. He attended high school there as well as the Brantford Collegiate Institute. Before graduating from high school he had written four novels, one of which was a 70,000 word romance about Maurice of Nassau, Prince of Orange. These early novels were all rejected by publishers.
His first writing success came in 1902 when the Brantford Courier accepted a mystery story from him, and he became a reporter there (for five dollars a week). He was an editor at the Guelph Daily Mercury between 1908 and 1910. He married Ida Randolph Spragge (1888-1975) in York, Ontario on January 12, 1910. The couple had two children, Molly (Mrs. Howard Haycraft) and Dora (Mrs. Henry Darlington Steinmetz). Also in 1910, Costain joined the Maclean Publishing Group where he edited three trade journals. Beginning in 1914, he was a staff writer for and, from 1917, editor of Toronto-based Maclean's magazine. His success there brought him to the attention of The Saturday Evening Post in New York City where he was fiction editor for fourteen years.
In 1920 he became a naturalized U.S. citizen. He also worked for Doubleday Books as an editor 1939-1946. He was the head of 20th Century Fox’s bureau of literary development (story department) from 1934 to 1942.
In 1940, he wrote four short novels but was “enough of an editor not to send them out”. He next planned to write six books in a series he called “The Stepchildren of History”. He would write about six interesting but unknown historical figures. For his first, he wrote about the seventeenth century pirate John Ward aka Jack Ward. In 1942, he realized his longtime dream when this first novel For My Great Folly was published, and it became a bestseller with over 132,000 copies sold. The New York Times reviewer stated at the end of the review "there will be no romantic-adventure lover left unsatisfied." In January 1946 he "retired" to spend the rest of his life writing, at a rate of about 3,000 words a day.
Raised as a Baptist, he was reported in the 1953 Current Biography to be an attendant of the Protestant Episcopal Church. He was described as a handsome, tall, broad-shouldered man with a pink and white complexion, clear blue eyes, and a slight Canadian accent. He was white-haired by the time he began to write novels. He loved animals and could not even kill a bug (but he also loved bridge, and he did not extend the same policy to his partners). He also loved movies and the theatre (he met his future wife when she was performing Ruth in the The Pirates of Penzance).
Costain's work is a mixture of commercial history (such as The White and The Gold, a history of New France to around 1720) and fiction that relies heavily on historic events (one review stated it was hard to tell where history leaves off and apocrypha begins). His most popular novel was The Black Rose (1945), centered in the time and actions of Bayan of the Baarin also known as Bayan of the Hundred Eyes. Costain noted in his foreword that he initially intended the book to be about Bayan and Edward I, but became caught up in the legend of Thomas a Becket's parents: an English knight married to an Eastern girl. The book was a selection of the Literary Guild with a first printing of 650,000 copies and sold over two million copies in its first year.
His research led him to believe that Richard III was a great monarch tarred by conspiracies, after his death, with the murder of the princes in the tower. Costain supported his theories with documentation, suggesting that the real murderer was Henry VII.
Costain died in 1965 at his New York City home of a heart attack at the age of 80. He is buried in the Farringdon Cemetery in Brantford.
He received a Doctor of Letters (D. Litt) degree from the University of Western Ontario in May 1952 and he received a gold medallion from the Canadian Club of New York in June 1965. The Thomas B. Costain public elementary school (1953) and the Thomas B. Costain — S.C. Johnson Community Centre (2002) in Brantford are named in his honor.
His daughter Molly Costain Haycraft became a writer of historical novels.