Martin Lister was baptized on 11 April 1639 at Radclive, Buckinghamshire, the fourth of ten children. He is said to have been educated under the care of his great-uncle, Sir Matthew Lister MD. He attended Melton Mowbray School and was admitted as a pensioner to St John's College, Cambridge, in 1655. At the Restoration he was appointed fellow of St John's College by royal mandate. It is probable that he owed this to his great-uncle's service as physician to the king's father and grandfather.

In 1663 Lister travelled to France, joining other English scholars at Montpellier. Whilst protestants could not enrol at the university, Lister was able to join an academy through which he studied medicine, anatomy, and botany. Having returned to England, Lister resigned his fellowship in 1669 and married Hannah Parkinson in York. He and Hannah went on to have eight children. The following year he established a medical practice in York, where he gathered around him a club of virtuosi, including the artists Francis Place and William Lodge, who illustrated some of Lister’s works. He was a keen letter writer and several of his letters were published in the Philosophical Transactions. In 1671 Lister was admitted as fellow of the Royal Society. Shortly afterwards he wrote his first book, the Historia animalium Angliae tres tractatus (1678–81), of which the first part was a systematic description of English spiders and their habits, while the others were about terrestrial and marine molluscs. Other books followed, on insects (translation of work by the Dutch entomologist Goedart), mineral waters, and Lister's collected papers from the Philosophical Transactions.

In September 1683 the Lister family moved to London and Lister began to participate regularly in meetings of the Royal Society and was elected to its council. In March 1684 he was granted a DM by the University of Oxford. Two months later he was accepted by the Royal College of Physicians, and began to practise medicine among the highest levels of society, including attending the post-mortem of Charles II. When James II renewed the charter of the Royal College in 1687 Lister was named a fellow; in 1694 he was elected censor. In January 1685 Lister was elected vice-president of the Royal Society. At this time, his chief activity in natural history was the preparation of a classified set of copperplate-engravings of all known shells, largely executed by his eldest children, Susanna and Anne. The work is divided into four sections, the first of which (on land snails) was issued in 1685 under the title De cochleis, the others following in successive years. The final version, Historia sive synopsis methodica conchyliorum, with over a thousand plates, was not completed until 1697. Lister’s wife Hannah died in 1695 and he remarried Jane Jullen in 1698.

An asthmatic, Lister struggled with the pollution of London, and so he and Jane left London in 1702. Lister had a useful connection at court: Sarah, duchess of Marlborough, was Lister's niece by his mother's first marriage, and a close friend of Queen Anne. In 1702 Lister became fourth physician to the queen and in 1710 he was appointed second physician to the queen. Lister died in Epsom on 2 February 1712, and was buried beside his first wife Hannah at Clapham. He was commemorated by Robert Brown in the genus Listeria among orchids.