Asch was born in Kutno, Poland, of Jewish heritage. He was one of ten children of Moszek Asz 1825 Gabin-1905 Kutno a cattle-dealer and innkeeper and Frajda Malka nee Widawska 1850 Łęczyca, and received a traditional Jewish education; as a young man he followed that with a more liberal education obtained at Włocławek, where he supported himself as a letter writer for the illiterate Jewish townspeople. From there he moved to Warsaw, where he met and married Mathilde Shapiro, the daughter of the Polish-Jewish writer, M.M. Shapiro. Influenced by the haskalah (Jewish Enlightenment), initially Asch wrote in Hebrew, but I.L. Peretz convinced him to switch to Yiddish.
He traveled to Palestine in 1908 and the U.S. in 1910. He sat out World War I in the U.S. where he became a naturalized citizen in 1920. He returned to Poland. He later moved to France, visited Palestine again in 1936, and settled in the U.S. in 1938.
His Kiddush ha-Shem (1919) is one of the earliest historical novels in modern Yiddish literature, about the antisemitic Chmielnicki Uprising in mid-17th century Ukraine and Poland. When his 1907 drama God of Vengeance — which is set in a brothel and whose plot features a lesbian relationship — was performed on Broadway in 1923, the entire cast was arrested and successfully prosecuted on obscenity charges, despite the fact that the play was enough of a standard in Europe that it had already been translated into German, Russian, Polish, Hebrew, Italian, Czech and Norwegian. His 1929–31 trilogy Farn Mabul (Before the Flood, translated as Three Cities) describes early 20th century Jewish life in St. Petersburg, Warsaw, and Moscow. His Bayrn Opgrunt (1937, translated as The Precipice) is set in Germany during the hyperinflation of the 1920s. Dos Gezang fun Tol (The Song of the Valley) is about the halutzim (Jewish-Zionist pioneers in Palestine), and reflects his 1936 visit to that region.
A celebrated writer in his own lifetime, a 12-volume set of his collected works were published in the early 1920s, and in 1932 he was awarded the Polish Republic's Polonia Restituta decoration and was elected honorary president of the Yiddish PEN Club. However, he was later to offend Jewish sensibilities with his 1939–1949 trilogy The Nazarene, The Apostle, and Mary, which dealt with New Testament subjects. The Forward, New York's leading Yiddish-language newspaper, not only dropped him as a writer, but also openly attacked him for promoting Christianity.
Asch spent most his last two years in Bat Yam near Tel Aviv, Israel (but he died in London). His house in Bat Yam is now the Sholem Asch Museum. The bulk of his library, containing rare Yiddish books and manuscripts, including the manuscripts of some of his own works, is at Yale University.