Zhang was born in Xi'an, the capital of Shaanxi province. Zhang's father, a dermatologist, had been an officer in the National Revolutionary Army under Chiang Kai-shek during the Chinese Civil War; an uncle, and an elder brother had followed the Nationalist forces to Taiwan after their 1949 defeat. As a result, Zhang faced difficulties in his early life.
During the Cultural Revolution of the 1960s and 1970s, Zhang left his school studies and went to work, first as a farm labourer for 3 years, and later at a cotton textile mill for 7 years in the city of Xianyang. During this time he took up painting and amateur still photography, selling his own blood to buy his first camera. In 1978, he went to Beijing Film Academy and majored in photography. He has an Honorary Doctorate Degree from Boston University and also one from Harvard University.
When the Beijing Film Academy reopened its doors to new students in 1978, following the abandonment of policies adopted during the Cultural Revolution, Zhang, at 27, was over the regulation age for admission, and was without the prerequisite academic qualifications. After a personal appeal to the Ministry of Culture, and showing a portfolio of his personal photographic works, the authorities relented and admitted him to the Faculty of Cinematography. Zhang graduated with the class of 1982, which also included Chen Kaige, Tian Zhuangzhuang, and Zhang Junzhao. The class went on to form the core of the Fifth Generation, who were a part of an artistic reemergence in China after the end of the Cultural Revolution.
Zhang and his co-graduates were assigned to small regional studios, and Zhang was sent to work for the Guangxi Film Studio as a cinematographer. Though originally intended to work as director's assistants, the graduates soon discovered there was a dearth of directors so soon after the Cultural Revolution, and gained permission to start making their own films. This led to the production of Zhang Junzhao's One and Eight, on which Zhang Yimou worked as director of photography, and Chen Kaige's Yellow Earth, in 1984. These two films were successes at the Hong Kong Film Festival and helped to bring the new Chinese cinema to the attention of worldwide audiences, signaling a departure from the earlier propagandist films of the Cultural Revolution. Yellow Earth is today widely considered the inaugural film of the Fifth Generation directors.
In 1985, after moving back to his home town of Xi'an, Zhang was engaged as cinematographer and lead actor for director Wu Tianming's upcoming film Old Well, which was subsequently released in 1987. The lead role won Zhang a Best Actor award at the Tokyo International Film Festival.
1987 saw the release of Zhang's directorial debut, Red Sorghum, starring Chinese actress Gong Li in her first leading role. Red Sorghum was met with critical acclaim, bringing Zhang to the forefront of the world's art directors, and winning him a Golden Bear for Best Picture at the 38th Berlin International Film Festival in 1988.
Codename Cougar (or The Puma Action), a minor experiment in the political thriller genre, was released in 1989, featuring Gong Li and eminent Chinese actor Ge You. However, it garnered less-than-positive reviews at home and Zhang himself later dismissed the film as his worst.
In the same year, Zhang began work on his next project, the period drama Ju Dou. Starring Gong Li in the eponymous lead role, along with Li Baotian as the male lead, Ju Dou, garnered as much critical acclaim as had Red Sorghum, and became China's first film to be nominated for an Academy Award for Best Foreign Language Film. Ju Dou highlighted the way in which the "gaze" can have different meanings, from voyeurism to ethical appeal.
In 1989, he was a member of the jury at the 16th Moscow International Film Festival.
After the success of Ju Dou, Zhang began work on Raise the Red Lantern. Based on Su Tong's novel Wives and Concubines, the film depicted the realities of life in a wealthy family compound during the 1920s. Gong Li was again featured in the lead role, her fourth collaboration with Zhang as director.
Raise the Red Lantern received almost unanimous international acclaim. Film critic Roger Ebert of the Chicago Sun-Times noted its "voluptuous physical beauty" and sumptuous use of colours. Gong Li's acting was also praised as starkly contrasting with the roles she played in Zhang's earlier films. Raise the Red Lantern was nominated in the Best Foreign Language Film category at the 1992 Academy Awards, becoming the second Chinese film to earn this distinction (after Zhang's Ju Dou). It eventually lost out to Gabriele Salvatores's Mediterraneo.
Zhang's next directorial work, The Story of Qiu Ju, in 1992, once again starring Gong Li in the lead role. The film, which tells the tale of a peasant woman seeking justice for her husband after he was beaten by a village official, was a hit at film festivals and won the Golden Lion award at the 1992 Venice Film Festival.
Next, Zhang directed To Live, an epic film based on the novel by Yu Hua of the same name. To Live highlighted the resilience of the ordinary Chinese people, personified by its two main characters, amidst three generations of upheavals throughout Chinese politics of the 20th century. It was banned in China, but released at the 1994 Cannes Film Festival and won the Grand Jury Prize, as well as earning a Best Actor prize for Ge You. To Live was banned in China by the Chinese State Administration of Radio, Film, and Television, due to its critical portrayal of various policies and campaigns of the Communist government.[
Shanghai Triad followed in 1995, featuring Gong Li in her seventh film under Zhang's direction. The two had developed a romantic as well as a professional relationship, but this would end during production of Shanghai Triad. Zhang and Gong would not work together again until 2006's Curse of the Golden Flower.
1997 saw the release of Keep Cool, a black comedy film about life in modern China. Keep Cool marked only the second time Zhang had set a film in the modern era, after The Story of Qiu Ju.
As in The Story of Qiu Ju, Zhang returned to the neorealist habit of employing non-professional actors and location shooting for Not One Less in 1999 which won him his second Golden Lion prize in Venice.
Shot immediately after Not One Less, Zhang's 1999 film The Road Home featured a new leading lady in the form of the young actress Zhang Ziyi, in her film debut. The film is based on a simple throw-back narrative centering on a love story between the narrator's parents.
Happy Times, a relatively unknown film by Zhang, was based loosely on the short story Shifu: You'll Do Anything for a Laugh, by Mo Yan. Starring popular Chinese actor Zhao Benshan and actress Dong Jie, it was an official selection for the Berlin International Film Festival in 2002.
Zhang's next major project was the ambitious wuxia drama Hero, released in China in 2002. With an impressive lineup of Asian stars, including Jet Li, Maggie Cheung, Tony Leung Chiu-Wai, Zhang Ziyi, and Donnie Yen, Hero told a fictional tale about Ying Zheng, the King of the State of Qin (later to become the first Emperor of China), and his would-be assassins. The film was released in North America in 2004, two years after its Chinese release, by American distributor Miramax Films, and became a huge international hit. Hero was one of the few foreign-language films to debut at number 1 at the U.S. box office, and was one of the nominees for Best Foreign Language Film at the 2003 Academy Awards.
Zhang followed up the huge success of Hero with another martial arts epic, House of Flying Daggers, in 2004. Set in the Tang Dynasty, it starred Zhang Ziyi, Andy Lau, and Takeshi Kaneshiro as characters caught in a dangerous love triangle. House of Flying Daggers received acclaim from critics, who noted the use of colour that harked back to some of Zhang's earlier works.
Released in China in 2005, Riding Alone for Thousands of Miles was a return to the more low-key drama that characterized much of Zhang's middle period pieces. The film stars Japanese actor Ken Takakura, as a father who wishes to repair relations with his alienated son, and is eventually led by circumstance to set out on a journey to China. Zhang had been an admirer of Takakura for over thirty years.
2006's Curse of the Golden Flower saw him reunited with leading actress Gong Li. Taiwanese singer Jay Chou and Hong Kong star Chow Yun-fat also starred in the period epic based on a play by Cao Yu.
Zhang's recent films, and his involvement with the 2008 Olympic ceremonies, have not been without controversy. Some critics claim that his recent works, contrary to his earlier films, have received approval from the Chinese government. However, in interviews, Zhang has said that he is not interested in politics, and that it was an honour for him to direct the Olympic ceremonies because it was "a once-in-a-lifetime opportunity."
In 2008, he won a Peabody Award "for creating a spell-binding, unforgettable celebration of the Olympic promise, featuring a cast of thousands" at the opening ceremony of the Beijing Olympics.
On May 24, 2010, Zhang was awarded an honorary Doctor of Fine Arts degree by Yale University, and was described as "a genius with camera and choreography."
Zhang's 2011 The Flowers of War was his most expensive film to date, budgeting for $90.2 million, until his 2016 The Great Wall surpassed it with a budget of $150 million.