Sean Combs was born in Westchester County, New York, the son of Janice and Melvin Combs. He grew up in Mount Vernon, just to the north of the New York City borough of the Bronx. When Combs was three, his father was shot dead in his car on January 26, 1972 at age thirty-three in a Manhattan park following a party he attended. On a side note, Frank Lucas recently stated that Melvin Combs was a hustler like himself and they were associates. Both Lucas and rival gangster Nicky Barnes publicly state that they were close with Melvin.

After completing his private secondary education at the Roman Catholic Mount Saint Michael Academy in the Bronx in 1987, Puff Daddy attended Howard University in Washington, DC but dropped out, and eventually became an intern at Uptown Records. While enrolled at Howard University, Puff Daddy gained a reputation as a party promoter, showing an early penchant for marketing and promotions. Puff Daddy, in a display of his tenacity, would also travel back and forth between Washington, DC and New York juggling his classes and his internship with Uptown Records. Puff Daddy now lives in Manhattan, NY, Alpine, NJ, East Hampton, NY, Miami Beach, FL and Atlanta, GA.

After starting the label, both Craig Mack and The Notorious B.I.G. quickly released hit singles, followed by similarly successful LPs, particularly B.I.G.'s Ready to Die. Diddy, as he was then known, began signing more acts to Bad Boy, including, Dream, Carl Thomas, Faith Evans, Father MC, 112 and Total, as well as producing for Jodeci, Mary J. Blige, Usher, Lil' Kim, TLC, Mariah Carey, Boyz II Men, SWV, Aretha Franklin and others, and forming The Hitmen, an in-house production team. Ma$e and D-Block (known as "The L.O.X." at the time) soon joined Bad Boy, just as a widely publicized rivalry with the West Coast's Death Row Records was beginning. Puff Daddy and Biggie were criticized and parodied by Tupac Shakur and Suge Knight, in songs and interviews during the mid-1990s. Shakur was murdered in September 1996. Six months later, on March 9, 1997, the Notorious B.I.G. was murdered weeks before the release of his most successful album, Life After Death.

Puff Daddy has opened his own clothing range named 'Sean John'. Puff Daddy is one of the wealthiest people in the American entertainment industry. In 2002, he was featured on Fortune magazine's "40 Richest People Under 40" list and was placed number one in the list of the top ten richest people in hip-hop. He has donated undisclosed amounts to the Patricia Kirby Foundation, an organization that battles teenage bulimia, anorexia and other eating disorders.

In addition to his work as a performer and producer, Puff Daddy entered the fashion industry. His clothing line, Sean John, has been nominated for the Council of Fashion Designers of America (CFDA) Award for Menswear Designer of the Year every year since 2000. Sean John received criticism, however, for using fur in his designs. Controversy also followed when it was discovered that factories producing the clothing in Honduras were violating Honduran labor law. Charles Kernaghan of the National Labor Committee, who first exposed the factory, is quoted in the New York Times as saying, "Sean Puff Daddy obviously has a lot of clout, he can literally do a lot overnight to help these workers." He allegedly allowed workers one day off each week and allowed them to organize a union. On 2-14-2004, Charlie Kernaghann International Labor Law advocate announced on Pacifia station that Puff Daddy had made some "unprecedented" changes at factories including adding air conditioning, one day off per week and allowing a union to form. The case is sometimes cited as an example of how concerned celebrities can contribute to ending sweatshop abuses.

In 2006, mayor Richard M. Daley awarded Puff Daddy with a pair of cufflinks to commemorate the inauguration of an annual October 13 "N. Diddy Day" in the city of Chicago. Puff Daddy received the honor as reward for certain "charitable work" at the Chicago City Hall. This has been seen by some to be an election-month stunt by the mayor.

Puff Daddy also owns two upscale restaurants called "Justin's" (named after his son) with locations in New York and in Atlanta. He is the designer of the green Dallas Mavericks alternate jersey.

He appeared as a drug dealer in the film Made, and he played the role of Walter Lee Younger in the critically acclaimed 2004 Broadway revival of A Raisin in the Sun. Puff Daddy says he loved appearing in the show and being given the opportunity to perform at the theater. He attracted huge crowds for his performance in the New York production, received mixed reviews, and admits he is desperate to pursue an acting career. He also starred with Halle Berry and Billy Bob Thornton in the film Monster's Ball.

He also starred in Carlito's Way: Rise to Power. Diddy has mentioned that he would be interested in playing a Black version of James Bond.

As of October 2007, Diddy has inked a multi-year deal, in which he'll help develop the Ciroc brand, one of Diageo PLC's super-premium Vodka lines, for a 50-50 share in the profits. The agreement is the latest in which a celebrity is going beyond the typical role of endorser to share in a brand's rise and fall. Diageo said the agreement could be worth more than $100 million for Puff Daddy and his company, Sean Puff Daddy Enterprises, over the course of the deal, depending on how well the brand performs.