Nye graduated summa cum laude from Princeton University and, after studying PPE as a Rhodes Scholar at Exeter College at Oxford University, obtained his Ph.D. in political science from Harvard. He attended Morristown Prep (now the Morristown-Beard School) in Morristown, NJ and graduated in 1954.

Nye originally joined the Harvard faculty in 1964, serving as Director of the Center for International Affairs and as Associate Dean of Arts and Sciences. From 1977-1979, Nye was Deputy to the Undersecretary of State for Security Assistance, Science, and Technology and chaired the National Security Council Group on Nonproliferation of Nuclear Weapons.

In 1993 and 1994 he was chairman of the National Intelligence Council, which coordinates intelligence estimates for the President. Nye also served as Assistant Secretary of Defense for International Security Affairs in the Clinton Administration, and was considered by many to be the preferred choice for National Security Advisor in the 2004 presidential campaign of John Kerry. He is widely recognized as one of the foremost liberal thinkers on foreign policy, and is seen by some as the counter to renowned Harvard conservative Samuel P. Huntington.

In 2005, Nye was voted one of the ten most influential scholars of international relations in the USA.

He is on the Advisory board of the USC Center on Public Diplomacy as well as on the International Editorial Board of the Cambridge Review of International Affairs, the editorial board of Foreign Policy, the Board of Directors of the Council on Foreign Relations, the Guiding Coalition of the Project on National Security Reform, the Advisory Board of Carolina for Kibera, and the Board of the Center for Strategic and International Studies. He has been awarded the Woodrow Wilson Prize by Princeton University and the Humphrey Prize by the American Political Science Association. In 2005 he was awarded the Honorary Patronage of the University Philosophical Society of Trinity College Dublin and in 2007 he was awarded an honorary degree by King's College London.Nye has published many works in recent years, the most recent being Understanding International Conflicts, 7th ed (2009), The Power Game: A Washington Novel (2004), The Means to Success in World Politics (2004), and The Paradox of American Power (2002). Nye coined the term soft power in the late 1980s and it first came into widespread usage following a piece he wrote in Foreign Policy in the early 1990s.Nye and his wife, Molly Harding Nye, have three adult sons.