Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a Jewish cantor, his mother was a schoolteacher. He was educated at Princeton University (A.B., philosophy, 1957) and New York University School of Medicine, but left prior to graduation.

Icahn began his career on Wall Street in 1961. In 1968, he formed Icahn & Co., a securities firm that focused on risk arbitrage and options trading. In 1978, he began taking control of positions in individual companies. He has taken substantial or controlling positions in various corporations including RJR Nabisco, TWA, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, Uniroyal, Dan River, Marshall Field, E-II (Culligan and Samsonite), American Can, USX, Marvel Comics, Revlon, Imclone, Federal-Mogul, Fairmont Hotels, Blockbuster, Kerr-McGee, Time Warner and Motorola. With TWA, he got the rights to sell TWA tickets at a steep discount. People bought his tickets and pushed TWA into the red. Icahn is now trying to grab 4 seats on the Genzyme board.

Recently, Icahn showed interest in the takeover of Yahoo! and the ousting of Jerry Yang from his current position as CEO to allow Microsoft to purchase the web company.

In June 2008, Icahn launched The Icahn Report which campaigns for shareholder rights. It hosts United Shareholders of America where individual investors can sign up and take part.

In July 2010, Ichan acquired 14 percent stake in Mentor Graphics because of which Mentor Graphics signed a Poison Pill provision.

As of 2007, Icahn and his affiliates currently own majority positions in firms including ACF Industries, American Railcar Industries, XO Communications, Philip Services, and NYSE-listed Icahn Enterprises, formerly known as American Real Estate Partners.

Icahn was a director of Blockbuster until January 2010, and the chairman of Imclone, Icahn Enterprises, XO Communications, WestPoint Home, Cadus, and American Railcar Industries. He is a beneficial owner of Adventrx Pharmaceuticals, Vector Group and has had significant holdings in Time Warner. Icahn tried to take over Marvel Comics, coming into conflict with Avi Arad, Ron Perelman, and Ike Perlmutter. Marvel ended up being acquired by The Walt Disney Company in late 2009.

In 2004, Icahn purchased a large block of stock of Mylan Laboratories, after Mylan had announced a deal to acquire King Pharmaceuticals. Icahn threatened a proxy fight over the acquisition, on the ground that the deal required Mylan to overpay. He contended that Mylan's chief executive Robert J. Coury was significantly overcompensated and that Mylan's corporate governance was otherwise badly flawed. In early 2005, Mylan gave up its efforts to acquire King, but according to the management, the decision was made after it monitored relevant facts, not due to pressure from Icahn.

In 2006, Icahn sold his stake in KT&G (Korea Tobacco & Ginseng) for a substantial profit.

Icahn sold his casino interests in Nevada on 21 February 2008. They included the Stratosphere, Arizona Charlie's Boulder, Arizona Charlie's Decatur, and Aquarius Casino Resort which are operated through American Entertainment Properties, a subsidiary of Icahn's major company, Icahn Enterprises. The sale price of $1.3 billion was roughly $1 billion more than he paid for the properties.