Schaefer was born in Cleveland, Ohio, the son of an attorney. He graduated from Oberlin College in 1929 with a major in English. He attended graduate school at Columbia University from 1929-30, but left without completing his Master of Arts degree. He then went to work for the United Press. In his long career as a journalist, he would hold editorial positions at many eastern publications.

Schaefer's first success as a novelist came in 1949 with his memorable novel Shane, set in Wyoming. Few realized that Schaefer himself had never been anywhere near the west. Nevertheless, he continued writing successful westerns, selling his home in Connecticut and moving to Santa Fe, New Mexico in 1955.

In 1975 Schaefer received the Western Literature Association's Distinguished Achievement award.

He died of heart failure in Santa Fe in 1991. Schaefer was married twice, his second wife moving to Santa Fe with him.

Schaefer's novel Monte Walsh was made into a movie in 1970, with Lee Marvin in the title role, and again in 2003 as a TV movie starring Tom Selleck. Shane was also made into a movie and a series.