Joshi discovered Lovecraft when he was 13 in the public library in Muncie, Indiana. He read L. Sprague de Camp's biography of Lovecraft, Lovecraft: A Biography, on publication in 1975 and began thereafter to devote himself to the study of Lovecraft, guided in this by scholars such as Dirk W. Mosig, J. Vernon Shea and George Wetzel. He also wrote some Lovecraftian fiction such as the story "The Recurring Doom", which can be found in Robert M. Price's anthology Acolytes of Cthulhu. 
Joshi received a B.A. (1980) and M.A. (1982) in classics at Brown University, primarily because of the holdings of Lovecraft books and manuscripts in the John Hay Library. He later did graduate work at Princeton University from 1982 to 1984, where he was the recipient of the Paul Elmer More fellowship in classical philosophy. Appalled at finding literally 1,500 textual errors in his favorite Lovecraft story, At the Mountains of Madness, he devoted years of research consulting manuscripts and early publications to establish the textual history of Lovecraft's works, in order to prepare corrected editions of Lovecraft's collected fiction, revisions and miscellaneous writings in collaboration with Jim Turner for Arkham House; they were published in five volumes between 1984 and 1995.
His literary criticism focuses upon readability and exploration of the dominant worldviews of the authors in question. His The Weird Tale looks at six acknowledged masters of horror and fantasy (namely Arthur Machen, Algernon Blackwood, Dunsany, M. R. James, Bierce and Lovecraft), and discusses their respective worldviews in depth and with authority.
A follow-up volume, The Modern Weird Tale, examines the work of modern writers, including Shirley Jackson, Ramsey Campbell, Stephen King, Robert Aickman, Thomas Ligotti, T. E. D. Klein and others, from a similar philosophically oriented viewpoint. The third of what amounts to a critical trilogy on the weird tale, The Evolution of the Weird Tale (2004), includes essays on Dennis Etchison, L. P. Hartley, Les Daniels, E. F. Benson, Rudyard Kipling, David J. Schow, Robert Bloch, L. P. Davies, Edward Lucas White, Rod Serling, Poppy Z. Brite and others. Unutterable Horror: A History of Supernatural Fiction (published in two volumes, 2012 by PS Publishing) is a comprehensive history of supernatural fiction from Gilgamesh to the present day.
In August 2014, Joshi strongly criticized author Daniel José Older after the latter started a campaign to change the World Fantasy Award statuette from a bust of Lovecraft to one of African-American author Octavia Butler. Older claimed Lovecraft's image was unacceptable because of his racism; in response, Joshi stated ""the WFA bust acknowledges Lovecraft's literary status in the field of weird fiction and nothing more. It says nothing about Lovecraft's personality or character." Joshi also argued that the critics of Lovecraft were ignoring "the significant question as to whether racism should be regarded as so much more significant a moral, intellectual, and personal flaw than many other stances one could name", and argued that it was incorrect to think "that Lovecraft's undeniable racism somehow negates his immense talents as a writer and also negates the many virtues – intellectual, aesthetic, and personal – that he displayed over his life". Journalist Laura Miller took issue with Joshi's arguments, stating Joshi "is essentially telling writers like Okorafor that they must accept an honour from that community in the form of a man who considered [black people] to be 'semi-human' and filled 'with vice'. Suck it up, or get out. I'm pretty sure this is not the message the World Fantasy Convention meant to send when they gave Okorafor the prize in the first place."