Grappelli was born at Hôpital Lariboisière in Paris, France, and christened with the name Stéfano. His Italian father, marquess Ernesto Grappelli, was born in Alatri, Lazio, and his French mother, Anna Emilie Hanoque, was from St-Omer. His father was a scholar who taught Italian, sold translations, and wrote articles for local journals. Stéfano's mother died when he was four, leaving his father to care for him. Though living in France when World War I began, his father was still an Italian citizen and was drafted to fight for Italy in 1914.
Having written about the American dancer Isadora Duncan, who was living in Paris, Ernesto Grappelli appealed to her to care for his son. Stéfano enrolled in Duncan's dance school at age six, and he learned to love French Impressionist music. With the war encroaching, Duncan as an American citizen fled the country; she turned over her château to be used as a military hospital. Ernesto then entrusted his son Stéfano to a Catholic orphanage. Grappelli said of this time:
"I look back at it as an abominable memory... The Place was supposed to be under the eye of the government, but the government looked elsewhere. We slept on the floor, and often were without food. There were many times when I had to fight for a crust of bread", and claimed that he once tried eating flies as a means of easing his hunger. Stéfano stayed at the orphanage until his father returned from the war in 1918; the father found them an apartment in Barbès. Having been sickened by his experiences with the Italian military, Ernesto took Stéfano to city hall, pulled two witnesses off the street, and had his son nationalized as a Frenchman on July 28, 1919. The boy's first name of Stéfano was gallicized to Stéphane.
The boy began playing the violin at age 12; his father pawned his suit to buy him a three-quarter size violin. Ernesto sent his son to violin lessons, but Stéphane preferred to learn on his own. Grappelli said, "My first lessons were in the streets, watching how other violinists played… The first violinist that I saw play was at the Barbès métro station, sheltered under the overhead metro tracks. When I asked how one should play, he exploded in laughter. I left, completely humiliated with my violin under my arm.” After allowing Stéphane to learn independently for a brief period, Ernesto enrolled him at the Conservatoire de Paris on December 31, 1920; it would give him the chance to learn music theory, ear-training, and solfeggio. Stéphane graduated in 1923 with a second-tier medal. Ernesto remarried, to Anna Fuchs and moved to Strasbourg with her during Stéphane's final year of schooling. Though invited to join them, Stéphane chose to stay behind. He despised his father's new bride.
At age 15, Grappelli began busking full-time to support himself. His playing caught the attention of an elderly violinist, who invited him to accompany silent films in the pit orchestra at the Théâtre Gaumont. Grappelli played there for six hours daily over the course of a two-year period. During orchestra breaks, Grappelli visited a local brasserie, Le Boudon, where he would listen to songs from an American proto-jukebox. It was here that Grappelli was first introduced to jazz music. He was playing in the orchestra at the Ambassador in 1928 when Paul Whiteman headlined with Joe Venuti. Jazz violinists were rare, and though Venuti played mainly commercial jazz themes and seldom improvised, Grappelli was intrigued by his bowing when he played "Dinah". He began developing his own jazz-influenced playing style.
Grappelli was living with Michel Warlop, a classically trained violinist. While Warlop admired Grappelli's jazzy playing, Grappelli envied Warlop's income. After experimenting with piano, Grappelli stopped playing violin, choosing simplicity, new sound, and paid gigs over familiarity. He began playing piano in a big band led by a musician called Grégor. After a night of drinking in 1929, Grégor learned that Grappelli had originally played violin. Grégor borrowed a violin and had Grappelli improvise over "Dinah." Delighted, Grégor urged Grappelli to play violin again.
In 1930, Grégor ran into financial trouble. He was involved in an automobile accident that resulted in deaths; he fled to South America to avoid arrest. Grégor's band reunited as jazz ensemble under the leadership of pianist Alain Romans and saxophonist André Ekyan. While playing with this band, Grappelli met Gypsy jazz guitarist Django Reinhardt in 1931. He was looking for a violinist interested in jazz, and invited Grappelli to play with him at his caravan. Though the two played for hours that afternoon, their commitments to their respective bands prevented them from pursuing a career together.
Three years later, in 1934, the two encountered each other at Claridge's in London, England, and they began their musical partnership. Pierre Nourry, the secretary of the Hot Club de France invited Reinhardt and Grappelli to form the Quintette du Hot Club de France, with Joseph Reinhardt and Roger Chaput joining on guitar, and Louis Vola on bass.
In 1937, the American jazz singer Adelaide Hall and her husband Bert Hicks opened a nightclub, La Grosse Pomme, in Montmartre. She entertained nightly and hired the Quintette as one of the house bands. Also in the neighborhood was the artistic salon of R-26, at which Grappelli and Reinhardt performed regularly.
For the first three decades of his musical career, Grappelli was billed as Stéphane Grappelly, a gallicized form of his name. He took back the Italian spelling of his last name; he said in order to avoid people mispronouncing his surname as "Grappell-eye".
The Quintette du Hot Club de France disbanded in 1939 at the outbreak of World War II; Grappelli was in London and stayed there during the war. In 1940, jazz pianist George Shearing made his debut as a sideman in Grappelli's band.
In 1949, Reinhardt and Grappelli reunited for a brief tour of Italy, and made a series of recordings with an Italian rhythm group. The two recorded roughly 50 tracks together during this time. About half were later compiled for the album Djangology (released in 2005).
Grappelli played on hundreds of recordings, including sessions with Duke Ellington, jazz pianists Oscar Peterson, Michel Petrucciani and Claude Bolling, jazz violinists Svend Asmussen, Jean-Luc Ponty, and Stuff Smith, Indian classical violinist L. Subramaniam, vibraphonist Gary Burton, pop singer Paul Simon, mandolin player David Grisman, classical violinist , orchestral conductor André Previn, guitar player Bucky Pizzarelli, guitar player Joe Pass, cello player Yo Yo Ma, harmonica and jazz guitar player Toots Thielemans, jazz guitarist Henri Crolla, bassist Jon Burr and fiddler Mark O'Connor.
Grappelli first collaborated with the classical virtuoso when British chat-show host Michael Parkinson introduced them on TV in December 1971 to duet playing Jalousie. Another Parkinson TV performance followed in 1976, by which time the pair had put out three albums together on EMI (see below). In the TV show Menuhin played his prized Stradivari dating from 1714, while Grappelli revealed his instrument was made by Goffredo Cappa in 1695.
Grappelli also collaborated extensively with the British guitarist and graphic designer Diz Disley, recording 13 record albums with him and his trio (which included Denny Wright in its early years), and with now-renowned British guitarist Martin Taylor. His Parisian trio of many years included guitarist Marc Fosset and bassist Patrice Carratini.
In April 1973 he was invited as guest for some concerts at the Jazz Club "Jazz Power" in Milan, where he performed with an Italian jazz combo, including guitarist Franco Cerri, pianist
Nando De Luca, bassist / arranger Pino Presti, and drummer Tullio De Piscopo.
Grappelli recorded a solo for the title track of Pink Floyd's 1975 album Wish You Were Here. This was made almost inaudible in the mix, and so the violinist was not credited, according to Roger Waters, as it would be "a bit of an insult". A remastered version, with Grappelli's contribution fully audible, can be found on the 2011 Experience and Immersion editions of Wish You Were Here.
Grappelli made a cameo appearance in the 1978 film King of the Gypsies along with mandolinist David Grisman. Three years later they performed together in concert, which was recorded live and released to critical acclaim.
In the 1980s he gave several concerts with the young British cellist Julian Lloyd Webber.
In 1997, Grappelli received the Grammy Lifetime Achievement Award. He is an inductee of the Down Beat Jazz Hall of Fame.