He was born to an aristocratic family and was educated at Dar ol-Fonoon (1914-1916) and the Lycée Français (French high school) in Tehran. In 1925, he was among a select few students who travelled to Europe to continue their studies. There, he initially pursued dentistry before giving this up for engineering. After four years in France and Belgium, Hedayat returned to Iran where he held various jobs for short periods.
Hedayat subsequently devoted his whole life to studying Western literature and to learning and investigating Iranian history and folklore. The works of Guy de Maupassant, Anton Chekhov, Rainer Maria Rilke, Edgar Allan Poe and Franz Kafka intrigued him the most. During his short literary life span, Hedayat published a substantial number of short stories and novelettes, two historical dramas, a play, a travelogue, and a collection of satirical parodies and sketches. His writings also include numerous literary criticisms, studies in Persian folklore, and many translations from Middle Persian and French. He is credited with having brought Persian language and literature into the mainstream of international contemporary writing. There is no doubt that Hedayat was the most modern of all modern writers in Iran. Yet, for Hedayat, modernity was not just a question of scientific rationality or a pure imitation of European values.
In his later years, feeling the socio-political problems of the time, Hedayat started attacking the two major causes of Iran’s decimation, the monarchy and the clergy, and through his stories he tried to impute the deafness and blindness of the nation to the abuses of these two major powers. Feeling alienated by everyone around him, especially by his peers, Hedayat’s last published work, The Message of Kafka, bespeaks melancholy, desperation and a sense of doom experienced only by those subjected to discrimination and repression.
Hedayat's most enduring work is the short novel The Blind Owl of 1937. It has been called "one of the most important literary works in the Persian language" (S. A. Qudsi).