Stigler was born in Seattle, Washington, the son of Elsie Elizabeth (Hungler) and Joseph Stigler. He was of German descent and spoke German in his childhood. He graduated from the University of Washington in 1931 with a BA and then spent a year at Northwestern University from which he obtained his MBA in 1932. It was during his studies at Northwestern that Stigler developed an interest in economics and decided on an academic career.
After he received a tuition scholarship from the University of Chicago, Stigler enrolled there in 1933 to study economics and went on to earn his Ph.D. in economics there in 1938. He taught at Iowa State College from 1936 to 1938. He spent much of World War II at Columbia University, performing mathematical and statistical research for the Manhattan Project. He then spent one year at Brown University. He served on the Columbia faculty from 1947 to 1958.
His 1962 article "Information in the Labor Market" developed the theory of search unemployment. In 1963 he was elected as a Fellow of the American Statistical Association.
Stigler wrote numerous articles on the history of economics, published in the leading journals and republished 14 of them in 1965. The American Economic Review said, "many of these essays have become such well-known landmarks that no scholar in this field should be unfamiliar with them.... The lucid prose, penetrating logic, and wry humor... have become the author's trademarks." However, Economist Deirdre McCloskey later referred to Stigler as "among the worst historians of economic thought in the history of the discipline" who "read a lot but was defective in paying attention."
Stigler was a founding member of the Mont Pelerin Society and was its President from 1976 to 1978.