Joseph Johnson was born near Liverpool in 1738. He came to London in 1752, when he was fourteen, and became apprenticed to George Keith, a bookseller. Between 1760 and 1765, he had several bookshops of his own before he formed partnerships first with Benjamin Davenport, then with John Payne, in Paternoster Row. After a fire destroyed his and Payne's business in 1770, he opened a new shop in St. Paul's Churchyard, where he remained for the next thirty-nine years.

During the 1760s, Johnson became friends with a number of people who would influence his thinking and whose writings he would later publish, among them John Aikin, George Fordyce, Henry Fuseli, and Joseph Priestley. In part because of Priestley's influence, Johnson, reared a Baptist, became a Unitarian, and in 1774 was a co-founder, with Theophilus Lindsey, of the Essex Street Chapel, the first Unitarian place of worship in England.

With the establishment of his own shop in 1770, Johnson became known as an advocate of publishing inexpensive books, in order to create as wide a readership as possible for them. From the early 1770s until shortly before his death in 1809, he held weekly dinners for the authors he published, and is credited for bringing together many of the leading intellectuals of his time. Frequent guests included Fuseli, Priestley, William Godwin, John Aikin, Anna Letitia Barbauld, and John Horne Tooke.

In 1788, Johnson and his friend Thomas Christie founded the Analytical Review, a liberal and Unitarian periodical that one of his biographers has described as "as accurate a reflection of the thought of English liberalism in the 1790s as we have." During its ten-year run, the Review published articles by Henry Fuseli, Mary Wollstonecraft, and Mary Hays, among many others. In 1796, Johnson also participated in the founding and production of the Dissenting periodical, the Monthly Magazine, whose contributors included John Aikin and Anna Letitia Barbauld.

Johnson's continuing interest in progressive thought in those years is also reflected by his publication of such works as Mary Wollstonecraft's A Vindication of the Rights of Men (1790), her Vindication of the Rights of Woman (1792) and Historical and Moral View of the Origin and Progress of the French Revolution (1794), and Thomas Paine's Rights of Man (1791). The 1790s, however, were also a decade of increasing political conservatism in England, in which publishers and booksellers came under increasing scrutiny for their production of allegedly seditious material. In 1798, Johnson was charged with selling a controversial pamphlet by Gilbert Wakefield, and sentenced in January 1799 to six months in prison. A chronic sufferer of asthma, Johnson's condition worsened during his imprisonment; he never completely regained his health.

Partly because of his imprisonment, partly owing to changes in the political climate, and in part because of the growth of large publishing houses in the early 1800s, Johnson's business suffered after 1800; after another fire damaged his shop in 1806, he went into semi-retirement. He died in December 1809, at age 71.