He was born at Wormesley Grange, five miles north west of Hereford in Herefordshire, UK, was the son of Rev. Thomas Knight (1697-1764) and nephew and heir of Richard Knight (1693-1765) of Croft Castle. They were two of the sons of Richard Knight, a wealthy Ironmaster of Bringewood Ironworks. He was educated at home, but toured Italy and the European continent from 1767 for several years. He was a collector of ancient bronzes and coins, a Member of Parliament from 1780 to 1806, and an author of numerous books and articles on ancient sculpture, coins and other artefacts. As a member of the Society of Dilettanti, Knight was widely considered to be an arbiter of taste. He bequeathed his collection of bronzes, coins, engraved gems, marbles, and drawings to the British Museum.

Notoriously, Knight's first book, The Worship of Priapus, sought to recover the importance of ancient phallic cults. Knight's apparent preference for ancient sacred eroticism over Judeo-Christian puritanism led to many attacks on him as an infidel and as a scholarly apologist for libertinism. This ensured the persistent distrust of the religious establishment. The central claim of The Worship of Priapus was that an international religious impulse to worship ‘the generative principle’ was articulated through genital imagery, and that this imagery has persisted into the modern age. In some ways the book was the first of many later attempts to argue that Pagan ideas had persisted within Christian culture, a view that would eventually crystallise into the neo-Pagan movement over a century later.

Another book of interest to the neo-Pagan movement was Knight's Symbolical Language of Ancient Art and Mythology.

An Analytical Inquiry into the Principles of Taste, 1805, was, however, Knight’s most influential work in his lifetime. This book sought to explain the experience of ‘taste’ within the mind and to clarify the theorisation of the concept of the picturesque, following from the writings of William Gilpin and Uvedale Price on the subject. Knight's views on the aesthetics of the picturesque are also formed in engagement with Edmund Burke's emphasis on the importance of sensation, which Knight partly rejects in favour of a modified associationism. The philosophical basis of Knight's theories have implications for his account of the relationship between the ‘beautiful’ and the ‘picturesque’. For Knight, aesthetic concepts cannot be formed directly from optical sensations, because these must be interpreted within the mind before they can be recognised as beautiful. Thus a Classical architecture Roman temple is beautiful because of the proportions of its parts, but these proportions can never be perceived directly by the senses, which will simply encounter a mass of confused impressions. ‘Beauty’ is thus a product of internal mental acts. It is therefore proper to speak of moral, mathematical and other non-sensuous forms of beauty, contrary to Burke, Hogarth and others who claimed such usages were metaphorical. In all cases ‘the particular object [e.g. proportion] is an abstract idea.’

For Knight ‘picturesque’ means simply ‘after the manner of painting’, a point which is important to his further discussion of sensation, which in Knight's view is central to the understanding of painting and music which are ‘addressed to the organs of sight and hearing’, while poetry and sculpture appeal ‘entirely to the imagination and passions.’ The latter must be understood in terms of associations of ideas, while the former rely on the ‘irritation’ or friction of sensitive parts of the body. Artists should seek to reproduce primal visual sensations, not the mental interpretative processes which give rise to abstract ideas.

For Knight, colour is experienced directly as pleasurable sensation. A pure blue is not pleasurable because it reminds us of clear skies, as Price supposed, but because of the experience itself. Interpretation of impressions follows chains of association following from this primal sensory experience. However, the pleasures of sense may be ‘modified by habit’, so that the pure stimulus of colour may be experience as pleasurable when ‘under the influence of mind’ which perceives its meaningful use within a painting. Excess of pure colour is painful, like any other sensory excess. Variety and combination of colours is most pleasurable.

Knight makes much of the need to fragment an image into tonal and colouristic ‘masses’, a view has been claimed to anticipate the late work of Turner, or even Impressionism. However, it most directly justifies the practices of contemporary painters of picturesque landscapes, such as Girtin, whose stippling effects are comparable to Knight’s account of pleasing colour combinations.

Sculpture – typically colourless form – generates in the mind the idea of shape which we must conceptualise, as with ‘proportion’. The literary arts, like sculpture, deal with thoughts and emotions, though in a more complex form. Knight’s account of these arts therefore falls under the heading of ‘association of ideas’. Here Knight shows the influence of the contemporary cult of sensibility, arguing that these arts engage our sympathies, and in so doing demonstrate the inadequacy of ‘rules and systems’ in both morality and aesthetics. These teach ‘men to work by rule, instead of by feeling and observation.’ Rule-based knowledge of wrong cannot prevent wrongdoing, because it is thought not felt. Therefore, ‘it is impossible that tragedy should exhibit examples of pure and strict morality, without becoming dull and uninteresting.’

Knight’s discussion of ‘the passions’ engages with both Classical and recent theorisations of sentiments. His discussion of the sublime is directed against Burke’s emphasis on feelings of terror and powerlessness. Knight defends Longinus's original account of sublimity, which he summarises as the ‘energetic exertion of great and commanding power.’ Again he intertwines social and aesthetic reasoning, asserting that the power of a tyrant cannot be sublime if the tyrant inspires fear by mere arbitrary whim, like Nero. However, it may be sublime if his tyranny, like Napoleon's, derives from the exercise of immense personal capacities. A Nero may be feared, but would also be despised. A Napoleon may be hated, but will nevertheless inspire awe. In art, the mind experiences the sublime as it experiences the exercise of its own powers, or sympathises with the exercises of the powers of others. Fear itself can never engender the sublime.

Knight’s emphasis on the roles of sensation and of emotion were constituative of later Romantic and Victorian aesthetic thinking, as was his vexed struggle with the relation between moral feeling and sensuous pleasure. Though some contemporaries condemned the basis of his thought as an aestheticised libertinism, or devotion to physical sensation, they influenced John Ruskin’s attempts to theorise the Romantic aesthetic of Turner, and to integrate political and pictorial values.