Lipmann was born in New York City to German-Jewish parents, Jacob and Daisy Baum Lippmann. The family lived a comfortable, if not privileged, life. Annual family trips to Europe were the rule.
At age 17, he entered Harvard University where he studied under George Santayana, William James, and Graham Wallas. He concentrated on philosophy and languages (he spoke both German and French) and graduated after only three years of study.
In 1913 Lippmann, Herbert Croly, and Walter Weyl became the founding editors of the New Republic magazine. During World War I, Lippmann became an advisor to President Woodrow Wilson and assisted in the drafting of Wilson's Fourteen Points.
Early on, Lippmann was optimistic about American democracy. He believed that the American people would become intellectually-engaged in political and world issues and fulfill their democratic role as an educated electorate. In light of the events leading to World War II and the concomitant scourge of totalitarianism however, he rejected this view. Lippmann came to be seen as Noam Chomsky's moral and intellectual antithesis: He agreed with the Platonic view that the population is a great beast, a herd, that has to be controlled by an intellectual specialist class. In this sense Lippmann might be viewed as a forerunner of US neoconservatism. Chomsky used two of Lippmann's catch phrases for titles for his books about the media: Necessary Illusions and Manufacturing Consent.
It was Lippmann who first identified the tendency of journalists to generalize about other people based on fixed ideas. In addition to his newspaper columns, he published several books.