George Stephenson was born in Wylam, Northumberland, 15 km. west of Newcastle upon Tyne. He was the second child of Robert and Mabel, neither of whom could read or write. Robert was the fireman for Wylam Colliery pumping engine, earning a low wage, so that there was no money for schooling. At 17, Stephenson became an engineman at Water Row Pit, Newburn. George realised the value of education and paid to study at night school to learn reading, writing and arithmetic. In 1801 he began work at Black Callerton colliery as a ‘˜brakesman', controlling the winding gear of the pit.

In 1802 he married Frances (Fanny) Henderson and moved to Willington Quay, east of Newcastle. There he worked as a brakesman while they lived in one room of a cottage. George made shoes and mended clocks to supplement his income. In 1803 their son Robert was born, and in 1804 they moved to West Moor, near Killingworth while George worked as a brakesman at Killingworth pit. His wife gave birth to a daughter, who died after a few weeks, and in 1806 Fanny died of consumption. George, then decided to find work in Scotland, and he left Robert with a local woman while he went to work in Montrose. After a few months he returned, probably because his father was blinded in a mining accident. George moved back into his cottage at West Moor and his unmarried sister Eleanor moved in to look after Robert.

In 1811 the pumping engine at High Pit, Killingworth was not working properly and Stephenson offered to fix it. He did so with such success that he was soon promoted to enginewright for the neighbouring collieries at Killingworth, responsible for maintaining and repairing all of the colliery engines. He soon became an expert in steam-driven machinery.

Stephenson designed his first locomotive in 1814, a travelling engine designed for hauling coal on the Killingworth wagonway, and named Bl¼cher after the Prussian general Gebhard Leberecht von Bl¼cher. This locomotive could haul 30 tons of coal up a hill at 6.4 km/h (4 m.p.h.), and was the first successful flanged-wheel adhesion locomotive: its traction depended only on the contact between its flanged wheels and the rail. Altogether, Stephenson produced 16 locomotives at Killingworth.

The new engines were too heavy to be run on wooden rails, and iron rails were in their infancy, with cast iron exhibiting excessive brittleness. Together with William Losh, Stephenson improved the design of cast iron rails to reduce breakage. According to Rolt, he also managed to solve the problem caused by the weight of the engine upon these primitive rails. He experimented with a 'steam spring' (to 'cushion' the weight using steam pressure), but soon followed the new practice of 'distributing' weight by utilising a number of wheels. For the Stockton and Darlington Railway, however, Stephenson would use only wrought iron rails, notwithstanding the financial loss he would suffer from not using his own, patented design.
Stephenson was hired to build a 13 km. railway from Hetton colliery to Sunderland in 1820. The finished result used a combination of gravity on downward inclines and locomotives for level and upward stretches. It was the first railway using no animal power.

In 1821, a parliamentary bill was passed to allow the building of the Stockton and Darlington Railway (S&DR). The 25-mile (40 km) railway was intended to connect various collieries situated near Bishop Auckland to the River Tees at Stockton, passing through Darlington on the way. The original plan was to use horses to draw coal carts on metal rails, but after company director Edward Pease met Stephenson he agreed to change the plans. Stephenson surveyed the line in 1821, assisted by his eighteen-year-old son Robert. That same year construction of the line began.

A manufacturer was now needed to provide the locomotives for the new line. As it turned out, Pease and Stephenson jointly established a company in Newcastle to manufacture locomotives. The company was set up as Robert Stephenson and Company, and George's son Robert was the managing director. A fourth partner was Michael Longridge of Bedlington Ironworks. In September 1825 the works at Forth Street, Newcastle completed the first locomotive for the new railway: originally named Active, it was soon renamed Locomotion. It was followed by "Hope", "Diligence" and "Black Diamond". The Stockton and Darlington Railway opened on 27 September 1825. Driven by Stephenson, Locomotion hauled an 80-ton load of coal and flour 15 km in two hours, reaching a speed of 39 km/h (24 m.p.h.) on one stretch. The first purpose-built passenger car, dubbed Experiment, was attached, and carried dignitaries on the opening journey. It was the first time passenger traffic had been run on a steam locomotive railway.

The rails used for the new line were of wrought-iron, produced by John Birkinshaw at the Bedlington Ironworks. Wrought-iron rails could be produced in much longer lengths than the cast-iron ones and were much less liable to crack under the weight of heavy locomotives. William Losh of Walker Ironworks had thought that he had an agreement with Stephenson to use his cast-iron rails, and Stephenson's decision caused a permanent rift between the two men. The gauge that Stephenson chose for the line was 4 ft 8½ in (1435 mm), and this subsequently came to be adopted as the standard gauge for railways, not only in Britain, but also throughout the world.

While building the Stockton and Darlington Railway, Stephenson had noticed that even small inclines greatly reduced the speed of locomotives possible. He used this knowledge while working on the Bolton and Leigh Railway, and the Liverpool and Manchester Railway (L&MR), executing a series of difficult cuts, embankments and stone viaducts to smooth the route the railways took. As the L&MR approached completion in 1829, its directors arranged for a competition to decide who would build its locomotives, and the Rainhill Trials were run in October 1829. Entries could weigh no more than six tons and had to travel along the track for a total distance of 60 miles (97 km). Stephenson's entry was Rocket, and its performance in winning the contest made Stephenson famous, and he was offered the position of chief engineer for a wide variety of other railways.

The next ten years were the busiest of Stephenson's life, as he was besieged with requests from railway promoters. Despite Stephenson's losing some routes to competitors due to his caution, he was offered more work than he could cope with, and was unable to decline offers for additional workStephenson tended to become a reassuring name, rather than a cutting-edge technical adviser. He was the first president of the Institution of Mechanical Engineers on its formation in 1847. He had by this time settled into semi-retirement, supervising his mining interests in Derbyshire - tunnelling work for the North Midland Railway had revealed unworked coal seams, and Stephenson put much of his money into their exploitation.

Stephenson's first wife, Fanny died in 1806, and his only son, Robert was brought up by George and his unmarried sister Eleanor. In 1820, George married Elizabeth Hindmarsh, a farmer's daughter whom George had wanted to marry when he was young; he had been considered unworthy of her. George and Elizabeth (Betty) had no children, and she died in 1845. In 1848 George married for the third time, to Ellen Gregory who had been his housekeeper. Six months after his wedding, George contracted pleurisy and died, aged 67, on 12 August 1848 at Tapton House in Chesterfield, Derbyshire. He was buried at Holy Trinity Church, Chesterfield, alongside his second wife.

The house at Wylam is a small white-washed cottage, now owned by the National Trust and listed Grade II*.