He was raised in Jackson Heights, Queens. In 1949 his father suffered a heart attack and subsequently moved the family to Ellenville, New York while he recovered. His father's relatives lived there, making it an idyllic experience for him. Guare did not regularly attend school in Ellenville because the school's daily practices were not in keeping with the recommendations of the Catholic Church, causing his father to suspect the school had communist leanings. Instead of attending school, Guare was assigned home study and took exams intermittently, which allowed him time to go to the movies and see all the hits of the time. This had a lasting influence on Guare, and his career, later in life.
He attended Georgetown University and the Yale School of Drama, graduating in 1962 with a M.F.A in Playwriting. Under the direction of Georgetown's Donn B. Murphy, his play The Toadstool Boy, about a country singer's quest for fame, won first place in the District of Columbia Recreation Department's One-Act-Play competition. In 1960, the Mask and Bauble presented The Thirties Girl, a musical for which Guare did the book, much of the music and the lyrics, again under Murphy's tutelage. Set in Hollywood's turbulent 1920s, it deals with the dethronement of a reigning diva by a fresh-faced starlet.
Guare's early plays, mostly comic one-acts exhibiting a flair for the absurd, include To Wally Pantoni, We Leave a Credenza, produced at Caffe Cino in 1965 and Muzeeka (1968).
The House of Blue Leaves, a domestic drama by turns wildly comic and despairingly poignant, premiered Off-Broadway in 1971 at the Truck and Warehouse Theatre. It was revived Off-Broadway at the Lincoln Center for the Performing Arts in 1986 before transferring to Broadway later in 1986. The play was revived on Broadway in 2011, starring Ben Stiller, whose mother, Anne Meara, had appeared in the 1971 production. According to Marilyn Stasio writing in Variety the play "sets the bar for smart comic lunacy."
Chaucer in Rome, "said to be a sequel of sorts to ... 'The House of Blue Leaves' and includ[ing] the son of one of the earlier play's characters" received its world premiere at the Williamstown Theatre Festival in July 1999 and was produced Off-Broadway in 2001 at Lincoln Center Theater's Newhouse Theater.
Later plays include Marco Polo Sings a Solo, produced at the Joseph Papp Public Theater/New York Shakespeare Festival in January to March 1977, with a cast that featured Joel Grey, Anne Jackson, Madeline Kahn, and Sigourney Weaver. Bosoms and Neglect was produced on Broadway in 1979, and revived Off-Broadway in 1998 by the Signature Theatre Company. Moon Over Miami was produced at the Williamstown Theatre Festival in 1987 and then at the Yale Repertory Theatre, New Haven in February 1989.
Guare's cycle of plays on nineteenth-century America are: Gardenia (1982)Lydie Breeze (1982) and Women and Water (1985). The so-called Lydie Breeze series, also called the "Nantucket" series, "follows a group of idealistic 19th century characters and their attempts to create a utopian society. "
Six Degrees of Separation was originally produced Off-Broadway at the Lincoln Center Theater, Newhouse Theatre in June 1990.Six Degrees of Separation is an intricately plotted comedy of manners about an African-American confidence man who poses as the son of film star Sidney Poitier. It has been the most highly praised and widely produced of Guare's full-length plays. It was made into a film in 1993, starring Stockard Channing and Will Smith.
Four Baboons Adoring the Sun was presented on Broadway at the Vivian Beaumont Theatre from February 22, 1992 to April 19, 1992, and was nominated for the 1992 Tony Award, Best Play.
He revised the book (uncredited) of the Cole Porter musical comedy Kiss Me, Kate for its 1999 Broadway revival. He wrote the book for the musical Sweet Smell of Success, which premiered on Broadway in 2002, for which he received a 2002 Tony Award nomination, Book of a Musical.
His play A Free Man of Color was a finalist for the 2011 Pulitzer Prize for Drama. The Pulitzer citation said: "An audacious play spread across a large historical canvas, dealing with serious subjects while retaining a playful intellectual buoyancy."
He is Co-Executive Editor of the Lincoln Center Theater Review, which he founded in 1987. He co-produces the New Plays Reading Room Series at the Lincoln Center Library for the Performing Arts and teaches in the Playwriting department at the Yale School of Drama.
In his foreword to a collection of Guare's plays, Louis Malle wrote:
Guare practices a humor that is synonymous with lucidity, exploding genre and clichés, taking us to the core of human suffering: the awareness of corruption in our own bodies, death circling in. We try to fight it all by creating various mythologies, and it is Guare's peculiar aptitude for exposing these grandiose lies of ours that makes his work so magical.
Gregory Mosher, formerly the artistic director of Lincoln Center Theatre, said that Guare, "along with David Mamet, Sam Shepard and a handful of other dramatists, reshaped the face of contemporary American theater over the past quarter century."
Guare received the Award of Merit in 1981 from the American Academy of Arts and Letters  for his plays The House of Blue Leaves, Rich and Famous, Marco Polo Sings a Solo, Landscape of the Body and Bosoms and Neglect. He received the Gold Medal in 2004.
He is married to Adele Chatfield-Taylor, an historic preservationist; she was President and CEO of the American Academy in Rome. They split their time between New York City, Long Island and the historic village of Waterford, Virginia where his wife grew up.