Born in County Durham, he joined the British Army's Royal Military Police and wrote stories in his spare time before retiring with the rank of Warrant Officer Class 1 in 1980 and becoming a professional writer.
In the 1970s he added to H. P. Lovecraft's Cthulhu Mythos cycle of stories, including several tales and a novel featuring the character Titus Crow. Several of his early books were published by Arkham House. Other stories pastiched Lovecraft's Dream Cycle but featured Lumley's original characters David Hero and Eldin the Wanderer. Lumley once explained the difference between his Cthulhu Mythos characters and Lovecraft's: "My guys fight back. Also, they like to have a laugh along the way."
Later works included the 
Lumley served as president of the Horror Writers Association from 1996 to 1997. On 28 March 2010 Lumley was awarded Lifetime Achievement Award of the Horror Writers Association. He also received a World Fantasy Award for Lifetime Achievement in 2010.