Denman Thompson's family moved from West Swanzey, New Hampshire, to Girard, Pennsylvania, in 1831 where he would be born two years later. In 1844 they returned to West Swanzey where he was educated and at age nineteen went to work as a bookkeeper in Lowell, Massachusetts. While there, he developed an interest in theatre and decided to make it his career. In 1854, he moved to Toronto, Ontario to train at the Royal Lyceum Theatre. In 1860, he married Maria Bolton, with whom he had three children, and by 1862 was performing on the stage in London, England.
Thompson returned to his native United States in 1868, where he continued to work in theatre. Years later, he was with a vaudeville troupe when he wrote a short sketch about "Joshua Whitcomb," a New Hampshire "hayseed" who travels to the big city. When Thompson performed the routine for the first time in Pittsburgh, it was warmly received, and became quite popular during the next few years. In 1885, he rewrote his sketch into a four act play, entitled "The Old Homestead." The new play opened in Boston in April of 1886 with Thompson in the lead role, and went on to become a very successful production that made Thompson a wealthy man. He toured with the play throughout the United States, and debuted with it on Broadway in 1904, and returned as a revival in 1907. In 1915, after his passing, it was made into a motion picture of the same name by the Famous Players Film Company.
Thompson wrote other plays, including some collaborative efforts with George W. Ryer, of which several were made into motion pictures. Their 1886 Broadway play became the basis for the 1926 film Sunshine of Paradise Alley, as was the case with their 1903 Broadway production of "Our New Minister," which became the basis for the script for the 1913 Kalem Company film starring Alice Joyce and Tom Moore. In 1914, the Kalem Company also made the highly successful adventure film serial, The Hazards of Helen, based on Thompson's work.
Denman Thompson died in 1911 at his home in West Swanzey, New Hampshire.