Born in Cooperstown, Illinois, his farmer father moved the family when Hatcher was young to Cooper, Iowa, where he received his early education. He first took an interest in paleontology while working as a coal miner to earn money for college. He matriculated at Grinnell College in the autumn of 1880, then after one term transferred to Yale University. Before graduating from Yale’s Sheffield Scientific School in 1884, he showed a small collection he had made of Carboniferous fossils to George Jarvis Brush, who later introduced him to the paleontologist Othniel C. Marsh. Hatcher became an assistant to Marsh until 1893, and he excelled in fossil fieldwork throughout the Western states. In 1889 near Lusk, Wyoming Hatcher excavated the first fossil remains of Torosaurus.
Hatcher was eventually unhappy at Yale, especially because of Marsh's policy of not allowing assistants to publish on their own. In 1890, he negotiated with Henry Fairfield Osborn for a position at the American Museum of Natural History, but nothing came of it. In 1893 he began a seven-year stint at Princeton University as curator of vertebrate paleontology and assistant in geology. In 1896, he conceived of, planned and secured the greater part of the funding for three expeditions to Patagonia, as well as the idea of publishing the results of the expeditions with funding from J. Pierpont Morgan. The trips were chronicled in the Princeton University Expeditions to Patagonia, 1896-1899. Because of the similarity of the flora and fauna in Patagonia and Australia, he concluded that the two were once connected by land.
Beginning in 1900 Hatcher was hired as curator of paleontology and osteology for the Carnegie Museum of Natural History. He was responsible for the scientific investigation and display of Diplodocus carnegii, a species named by Hatcher for his patron Andrew Carnegie (1835–1919), the Scottish-American industrialist. His monograph on the find was published in 1901 as Diplodocus Marsh: Its Osteology, Taxonomy, and Probable Habits, with a Restoration of the Skeleton.
Hatcher died in Pittsburgh, Pennsylvania of typhoid fever while completing a monograph on Ceratopsia begun by Marsh, who had died a few years earlier. The work was finally completed by Richard Swann Lull in 1907.
He is interred in Pittsburgh's Homewood Cemetery. For 91 years his grave went unmarked (his widow and children moved back to Iowa after his death). However, at the 1995 annual meeting in Pittsburgh of the Society of Vertebrate Paleontology, some members bought him a headstone engraved with his name and the sandblasted image of Torosaurus.