He was born at Andersloe or Ardsley, in Yorkshire. In 1642 he joined the parliamentarian army, and served as quartermaster in John Lambert's horse. In 1651 he adopted Quakerism, and gradually arrived at the conviction that he was a new incarnation of Christ. He gathered round him a small band of disciples, who followed him from place to place. At Appleby in 1653 and again at Exeter in 1655 he was imprisoned. In October 1655, in imitation of Christ's procession into Jerusalem, he entered Bristol on horseback, riding single--"a rawboned nude figure, with lank hair reaching below his cheeks"--attended by seven followers, some on horseback, some on foot. His followers sang "Hosanna! Holy, holy! Lord God of Sabaoth!" At the High Cross he and his followers were arrested.
His trial occupied the second parliament of Oliver Cromwell for several days, and on December 16, 1656 he was convicted of blasphemy and sentenced to be whipped from the Palace Yard to the Old Exchange, to be branded on the forehead with "B" (for blasphemer), to have his tongue bored with a red-hot iron, to be whipped through the streets of Bristol, and to suffer imprisonment with hard labour for two years. On his release he was readmitted into the communion of the Quakers, and spent some time in Westmorland with George Whitehead. In October 1660 Nayler set out to visit his long-forsaken family in Yorkshire, but died on the journey in Huntingdonshire.
A collected edition of the Tracts of Nayler appeared in 1716. See A Relation of the Life, Conversion, Examination, Confession, and Sentence of James Nayler (1657); a Memoir of the Life, Ministry, Trial, and Sufferings of James Nayler (1719); and a Refutation of some of the more Modern Misrepresentations of the Society of Friends commonly called Quakers, with a Life of James Nayler, by Joseph Gurney Bevan (1800).