He was born in Recife, Pernambuco state, from a distinguished Pernambucan plantation's owner family. He attended a Baptist school, then he moved to Texas in the United States, where he received a B.A. from Baylor University in 1920. Later he went to Columbia University, where studying under Franz Boas he earned his Master's degree in Political and Social Sciences with the dissertation "Social Life in Brazil in the Middle of the 19th Century"
He returned to Brazil in 1922 and began working in the Diário de Pernambuco. In 1927 he was named Cabinet Officer of the Governor Estácio de Albuquerque. But his political involvement led to his leaving the country for Portugal first, and then to United States in 1930. In Portugal he worked as translator and conceived the book that would became Casa-Grande & Senzala. In the same year he was invited to teach as Visiting Professor at Stanford University.
Returning to Brazil, he wrote and published Casa-Grande & Senzala, who shows the development of Brazilian society from the influences of the Portuguese, Indians, and African slaves. The work is credited with exposing the Brazilian cultural heritage and providing a source of national pride. He was instrumental in creating the social science center for the advanced study of the Northeast called Instituto Joaquim Nabuco. In addition, he is credited with founding university departments and creating professorial chairs in cultural anthropology and social research. In 1968 he received an honorary doctorate from the University of Münster.
In the 1930's, Freyre introduced the controversial idea of a "Brazilian racial democracy", in which he argued that the racial mixing that was looked down upon in Brazil was enriching the culture. In particular, he believed that the Iberian-Catholic tradition would play a prominent role within the hybrid culture, but the miscegenation among all the races would produce a unified and robust race and enable everyone to attain opportunities within the society. Within this paradigm, he coined the term Lusotropicalism that refers to the proclivity of Portugal to have been able to adapt and live in an environment that is able to harmoniously mix the various cultures and races in Brazil.
Heavily influenced by the teachings of Franz Boas, Freyre was compelled to document the achievements of the African. Through the lens of Brazilian history, he traced back the lack of white women to the need of colonizers to fraternize with the natives and later the African slaves. In this view, this original act was in itself civic devotion. He argued that it was not race that was creating social inequality, but that it was poverty that was degenerating men. He believed that the social classes in Brazil were based on economic disparities, and not racial differences.