In 1902 he joined the Art Students League of New York on a scholarship, where he was taught by Kenyon Cox. At the League's summer school in Woodstock, New York, he studied landscapes under Birge Harrison.
His first exhibition was in 1911. Dasburg exhibited three oils and a sculpture at the "International Exhibition of Modern Art", better known the Armory Show, that opened in New York City's 69th Regiment Armory in 1913 and introduced astonished New Yorkers to modern art. The three Cubist-oriented oils displayed at the 1913 show were considered "daringly experimental". In the years after the Armory Show Dasburg's works were exhibited along with those of other Modernists at Alfred Stieglitz's 291 gallery.
In both New York and Taos, he was part of the social milieu that included Georgia O'Keeffe and Gertrude Stein, and a close friend of Mabel Dodge Luhan. A painting named The Absence of Mabel Dodge was allegedly painted to inflame the jealousy of her then-lover, mutual friend John Reed (it was a pointed reminder of a peyote celebration in which the two had shared), and for four years Dasburg and Reed's other erstwhile lover Louise Bryant carried on an affair. The elderly Dasburg appeared posthumously as himself in the movie about Reed and Bryant's love affair, Reds, although he "curiously ... does not speak of his intimacy with either". He was also involved for some time with Ida Rauh, a co-founder of the Provincetown Players, and the two of them were friends with D. H. Lawrence and Frieda von Richthofen, and helped Lawrence recover from a bout with tuberculosis that nearly got him refused entry to the U.S. at the border with Mexico.
In 1936, he married poet Mary Channing Wister, the daughter of Owen Wister.
Dasburg died in his home in Taos, New Mexico on August 13, 1979, at age 92. Following his death, the Fine Arts Museum in Santa Fe held a 96-work retrospective exhibition funded in part by the National Endowment for the Arts which traveled to four other Western states. His works are in the collections of the Whitney Museum of American Art, the Metropolitan Museum of Art and the Denver Art Museum, among others.