Arnim was descended from a Prussian noble family. His father was Joachim Erdmann von Arnim (1741-1804), associated with the Prussian court and, among other roles, active as the Director of the Berlin theater. His mother, Amalia Carlonia Labes (1761-1781), died immediately after Arnim's birth.

Arnim spent his childhood with a grandmother in Berlin. He went on to study law and natural science at Halle and Göttingen, though he inclined from the first towards literature. His early writings included numerous articles for scientific magazines. He went on to travel through Europe with his brother, Carl Otto Ludwig, from 1801 to 1804. He published the important romantic Zeitung für Einsiedler (Newspaper for Hermits) in Heidelberg in 1808.

Arnim was influenced by the earlier writings of Goethe and Herder, from which he learned to appreciate the beauties of German traditional legends and folk songs. Forming a collection of these, published the result (1806-1808), in collaboration with Clemens Brentano under the title Des Knaben Wunderhorn. He married Brentano's sister Bettina in 1811, who won wide recognition as a writer in her own right, and his daughter Gisela (one of five children) became a writer as well.

He lived in Berlin from 1809, worked on Heinrich von Kleist's paper there and founded the political union "Deutsche Tischgesellschaft" . From October 1813 to February 1814 he was publisher of the Berlin paper "The Prussian Correspondent." He remained connected with the Prussian patriots (Adam Heinrich Müller, Friedrich de la Motte Fouqué, Heinrich von Kleist.) He moved in 1814 to his family home, Schloss Wiepersdorf, where he remained until his death by heart attack in 1831. His output, published in newspapers, magazines and almanacs as well as self-contained books, included novels, dramas, stories, poems and journalistic works. Following his death, his library was taken over by the Weimar court library. He is considered one of the most important representatives of German Romanticism.