Derain was born on in Chatou, Île-de-France, France. He attended the Académie Camillo and studied with Eugène Carrière. At the académie he would become friends with Henri Matisse. In 1900, he met and shared a studio with Maurice de Vlaminck and began to paint his first landscapes. In 1907 he experimented with stone sculpture and moved to Montmartre to be near his friend Pablo Picasso and other notable artists.
Derain supplied the illustrations for Guillaume Apollinaire's first book of poetry, L'Enchanteur pourissant (1909), and illustrated a collection of poems by Max Jacob in 1912. In 1916 he provided a set of illustrations for André Breton's first book, Mont de Piete.
After his service in the Army in World War I, the French art world received Derain with open arms. In 1919 he designed the ballet La Boutique fantasque for Diaghilev, leader of the Ballets Russes. A major success, it would lead to his creating many ballet designs.
His reputation rose to new heights when he was awarded the Carnegie Prize in 1928 and began to exhibit extensively abroad - in London, Berlin, Frankfurt, Düsseldorf, and in New York City and Cincinnati, Ohio.
During the German occupation of France in World War II, Derain lived primarily in Paris and was much courted by the Germans because he represented the prestige of French culture. Derain accepted an invitation to make an official visit to Germany in 1941. The Nazi propaganda machine naturally made much of Derain's presence in Germany, and after the Liberation he was branded a collaborator and ostracized by many people.
He died in Garches, Hauts-de-Seine, Île-de-France, France.
Today, paintings by Derain sell for as much as US$6 million.