Zamyatin was born in Lebedyan, 300 km south of Moscow. His father was a Russian Orthodox priest and schoolmaster, and his mother a musician. He may have had synesthesia as he gave letters and sounds qualities. For example, he saw the letter "L" as having pale, cold and light blue qualities. He studied naval engineering in Saint Petersburg from 1902 until 1908, during which time he joined the Bolsheviks. He was arrested during the Russian Revolution of 1905 and exiled, but returned to Saint Petersburg where he lived illegally before moving to Finland in 1906 to finish his studies. After returning to Russia, he began to write fiction as a hobby. He was arrested and exiled a second time in 1911, but amnestied in 1913. His Uyezdnoye (A Provincial Tale) in 1913, which satirized life in a small Russian town, brought him a degree of fame. The next year he was tried for maligning the military in his story Na Kulichkakh (At the world's end). He continued to contribute articles to various socialist newspapers. After graduating as a naval engineer, he worked professionally at home and abroad. In 1916 he was sent to England to supervise the construction of icebreakers at the shipyards in Walker and Wallsend while living in Newcastle upon Tyne.

Zamyatin wrote The Islanders, satirizing English life, and its pendant A Fisher of Men, both published after his return to Russia in late 1917. Zamyatin supported the October Revolution, but opposed the system of censorship under the Bolsheviks. After the Russian Revolution of 1917 he edited several journals, lectured on writing, and edited Russian translations of works by Jack London, O. Henry, H. G. Wells, and others.

His works became increasingly critical of the regime. He stated boldly: "True literature can only exist when it is created, not by diligent and reliable officials, but by madmen, hermits, heretics, dreamers, rebels and skeptics". This attitude caused his position to become increasingly difficult as the 1920s wore on. Ultimately, his works were banned, and he wasn't permitted to publish, particularly after the publication of We in a Russian émigré journal in 1927.

His novel We, while often discussed as primarily a political satire on the totalitarianism he perceived in the Soviet Union, is significant in other aspects as well. It may variously be examined as (1) a polemic against the optimistic scientific socialism of H. G. Wells whose works Zamyatin had previously published and with the heroic verses of the (Russian) Proletarian Poets, (2) as an example of Expressionist theory and (3) as an illustration of the archetype theories of Carl Jung as applied to literature. George Orwell believed that Aldous Huxley's Brave New World (1932) must be partly derived from We. However, in a 1962 letter to Christopher Collins, Huxley says that he wrote Brave New World as a reaction to H.G. Wells' utopias long before he had heard of We. According to We translator Natasha Randall, Orwell believed that Huxley was lying.Kurt Vonnegut said that in writing Player Piano (1952) he "cheerfully ripped off the plot of Brave New World, whose plot had been cheerfully ripped off from Yevgeny Zamyatin's We."

In addition to We, Zamyatin also wrote a number of short stories, in fairy tale form, that constituted satirical criticism of Bolshevik rule, such as in a mocking story about a city where the mayor decides that to make everyone happy he should make everyone equal. He starts by forcing everyone, himself included, to live in a big barrack, then to shave heads to be equal to the bald, and then to become mentally disabled to equate intelligence downward. This plot is very similar to that of The New Utopia (1891) by Jerome K. Jerome whose collected works were published three times in Russia before 1917. In its turn, Kurt Vonnegut's short story "Harrison Bergeron" (1961) bears distinct resemblances to Zamyatin's tale.

Zamyatin was eventually given permission to leave the Soviet Union by Joseph Stalin in 1931, after the intercession of Maxim Gorky. He settled, impoverished, in Paris with his wife, where he died of a heart attack in 1937. During his time in France, he notably worked with Jean Renoir, co-writing the script of his film Les Bas-fonds. He is buried in Thiais, France, at a cemetery on Rue de Stalingrad.

American Max Eastman describes Zamyatin's career in a chapter called "The Framing of Zamyatin" in his 1934 book Artists in Uniform.