One of six children, Emmanuel was born in Muswellbrook, New South Wales, Australia, in 1955. He received his first guitar in 1959 at age four and was taught by his mother to accompany her playing lap steel guitar. At the age of six in 1961, he heard Chet Atkins playing on the radio. He vividly remembers that moment and said it greatly inspired him.
By the age of six, he was a working professional musician. Recognizing the musical talents of Emmanuel and his older brother, Phil, their father created a family band, sold their home, and took his family on the road. With the family living in two station wagons, much of Emmanuel's childhood was spent touring Australia, playing rhythm guitar, and rarely going to school. Eventually the New South Wales Department of Education insisted that the Emmanuel children had to go to school regularly.
After their father died in 1966, the Emmanuels settled in Parkes. Tommy Emmanuel eventually moved to Sydney, where he was noticed nationally when he won a string of talent contests in his teen years. By the late 1970s, he was playing drums with his brother Phil in the group Goldrush as well as doing session work on numerous albums and jingles. He gained further prominence in the late 1970s as the lead guitarist in The Southern Star Band, the backing group for vocalist Doug Parkinson. During the early 1980s, he joined the reformed lineup of leading 1970s rock group Dragon, touring widely with it, including a 1987 tour with Tina Turner; he left the group to embark on a solo career.
In 1994, Australian music veteran John Farnham invited him to play guitar next to Stuart Fraser from Noiseworks for the Concert for Rwanda. Emmanuel had previously been a member of Farnham's band during the early 1980s and featured on the album Uncovered, and rejoined after the 1994 concert.
In July 1999, Chet Atkins commented that Emmanuel was a "fearless" fingerpicking guitar player and awarded Tommy and four others (John Knowles, Marcel Dadi, Jerry Reed, and Steve Wariner) the "Certified Guitar Player" title.
Emmanuel and his brother Phil performed live in Sydney at the closing ceremony of the Summer Olympics in 2000. The event was televised worldwide with an estimated 2.85 billion viewers.
In December 2007, he was diagnosed with heart problems and was forced to take a break from his hectic touring schedule due to exhaustion but returned to full-time touring in early 2008. In 2009 he worked with fellow local artists, Ray Burgess, Marty Rhone, John St Peeters and John "Swanee" Swan to release a single, "Legends of the Southern Land".
In June 2010, Emmanuel was appointed a Member of the Order of Australia (AM).
In 2012, Governor Steve Beshear awarded Emmanuel the state of Kentucky's honorific title of Kentucky Colonel.