Born in Upper Montclair, New Jersey, Hayden's parents were George and Frances Walter, who named him Sterling Relyea Walter (Hayden, Wanderer, pp. 65-66, 76, and 1920 U.S. Census). After his father died, he was adopted at the age of nine by James Hayden and renamed Sterling Walter Hayden. As a child, he lived in New Hampshire, Massachusetts, Pennsylvania, Washington D.C., and Maine, where he attended Wassookeag School in Dexter, Maine.

Hayden was a genuine adventurer and man of action, not dissimilar from many of his movie parts. He ran away to sea at 17, as a ship's boy, then later was a fisherman on the Grand Banks of Newfoundland. After serving as sailor and fireman on larger vessels, he was awarded his first command at 19, and sailed around the world several times.

Hayden became a print model and later signed a contract with Paramount Studios, who dubbed the 6' 5" (1.96 m) actor The Most Beautiful Man in the Movies and The Beautiful Blond Viking God. His first film starred Madeleine Carroll, with whom he fell in love and whom he married. But after just two film roles, he left Hollywood to serve as an undercover agent with William J. Donovan's COI office. He remained there after it became the OSS. Hayden also joined the Marines under the name John Hamilton (which was never his legal name). His World War II service included running guns through German lines to the Yugoslav partisans and parachuting into fascist Croatia. He won the Silver Star and a commendation from Yugoslavia's Marshal Tito.

His admiration for the Communist partisans led to a brief membership in the Communist Party. According to his IMDB biography, as the Red Scare deepened in U.S., "he cooperated with the House Un-American Activities Committee, confessing his brief Communist ties" and 'naming names'. His wife at that time, Betty De Noon, insisted that the 'names' her ex-husband provided were already in the hands of the Committee, which had a copy of the Communist Party's membership list. In any event, Hayden subsequently repudiated his own cooperation with the Committee, stating in his autobiography "I don't think you have the foggiest notion of the contempt I have had for myself since the day I did that thing." (Hayden, Wanderer, p. 354).

Sterling Hayden often professed distaste for film acting, claiming he did it mainly to pay for his ships and voyages. In 1959, after a very bitter divorce he was awarded custody of his children. He defied a court order and sailed to Tahiti with all four children, Christian, Dana, Gretchen and Matthew.

Hayden married Catherine Devine McConnell in 1960. They had two sons, Andrew and David, and were married until his death in 1986.

In the early 1960s, Hayden rented one of the pilot houses of the retired ferryboat Berkeley, docked in Sausalito, California where he resided, to pen his autobiography Wanderer, which was published in 1963.

In the 1970s, after his appearance in The Godfather, he appeared several times on NBC's The Tomorrow Show with Tom Snyder where he talked about his career resurgence and how it had funded his travels and adventures around the world. Hayden bought a canal barge in the Netherlands in 1969, eventually moving it to the heart of Paris and living on it part of the time. He also shared a home in Connecticut with his family and had an apartment in Sausalito, California.

In 1986, Sterling Hayden died of prostate cancer in Sausalito, California. He was 70.