Masters was the son of a Lieutenant-Colonel whose family had a long tradition of service in the Indian Army. He was educated at Wellington and Sandhurst. On graduating from Sandhurst in 1933, he was seconded to the Duke of Cornwall's Light Infantry (DCLI) for a year before applying to serve with the 4th Prince of Wales's Own Gurkha Rifles. He saw service on the North-West Frontier with the 2nd battalion of the regiment, and was rapidly given a variety of appointments within the battalion and the regimental depot, becoming the Adjutant of the 2nd battalion in early 1939.

During World War II his battalion was sent to Basra in Iraq, during the brief Anglo-Iraqi War. Masters subsequently served in Iraq, Syria and Persia. In early 1942, he attended the Indian Army Staff College at Quetta. Here he met the wife of a fellow officer and began an affair. They were later to marry. This caused a small scandal at the time.

After Staff College he first served as Brigade Major in 114th Indian Infantry Brigade before being "poached" by "Joe" Lentaigne, another officer from 4th Gurkhas, to be Brigade Major in 111th Indian Infantry Brigade, a Chindit formation. From March, 1944, the brigade served behind the Japanese lines in Burma. On the death of General Orde Wingate on April 24, Lentaigne became the Chindits' overall commander and Masters commanded the main body of 111 Brigade.

In May, the brigade was ordered to hold a position code-named ‘Blackpool’ near Mogaung in Northern Burma. The isolated position was attacked with great intensity for seventeen days and eventually the brigade was forced to withdraw. Masters had to order the medical orderlies to shoot 19 of his own men, casualties who had no hope of recovery or rescue. Masters later wrote about these events in the second volume of his autobiography, The Road Past Mandalay.

After briefly commanding the 3rd battalion of his regiment, Masters subsequently became GSO1 (the Chief of Staff) of Indian 19th Infantry Division, which was heavily involved in the later stages of the Burma Campaign, until the end of the war. After a spell as a staff officer in GHQ India in Delhi, he then served as an instructor at the British Army Staff College, Camberley. He left the army after this posting, and moved to the United States, where he attempted to set up a business promoting walking tours in the Himalayas, one of his hobbies. The business was not a success and, to make ends meet, he decided to write of his experiences in the army. When his novels proved popular, he became a full-time writer.

In later life, Masters and his wife Barbara moved to Santa Fe, New Mexico, USA. He died in 1983 from complications following heart surgery. His family and friends scattered his ashes from an aeroplane over the mountain trails he loved to hike. General Sir Michael Rose, the former UN commander in Bosnia, is a stepson of Masters.

John Masters; A Regimented Life by John Clay was published by Michael Joseph in 1992. Now out of print, it is a sympathetic but not uncritical biography. According to Clay, Masters possessed a strong and sometimes domineering personality, and could be impatient with weakness or incompetence. He could also be extremely warmhearted and generous. His outgoing and boisterous personality flourished during his long residence in the United States, with its greater social freedoms. Masters was impatient with the literary establishment, which faulted his Indian novels as unsympathetic to Indians, and he was impatient with editors who wanted to remove the rough edges from his characters. Masters strove for accuracy and realism, resenting it when people mistook his characters' views as his own. He was extremely hard-working and meticulously well-organized, both as a soldier and a novelist. Clay speculates that Masters may have been driven to achieve by rumors that his family was not pure English, but Anglo-Indian or Eurasian. In 1962 Masters learned what he had apparently long suspected, that he did indeed have a distant Indian ancestor.

Clay's biography provides details that Masters omitted from the three volumes of autobiography he wrote: "Bugles and a Tiger" (1956); "Road Past Mandalay" (1961); and "Pilgrim Son" (1971). They are nevertheless extremely revealing. "Bugles and a Tiger," which details Masters's time at Sandhurst and service on India's northwest frontier on the eve of World War II, is among the finest portraits of the profession of arms ever written. "Road Past Mandalay" deals mostly with the Burma campaign in World War II, while "Pilgrim Son" chronicles his career as a writer.