Neander was born at Göttingen as David Mendel. His father, Emmanuel Mendel, is said to have been a Jewish pedlar, but August adopted the name of Neander on his baptism as a Protestant Christian. While still very young, he moved with his mother to Hamburg. From the grammar school (Johanneum) he passed to the gymnasium, where the study of Plato appears especially to have engrossed him. Considerable interest attaches to his early companionship with Wilhelm Neumann and certain others, among whom were the writer Karl August Varnhagen von Ense and the poet Adelbert von Chamisso.

Baptized on February 25, 1806, Neander went to Halle to study divinity at the age of 17. Friedrich Schleiermacher was then lecturing at Halle. Neander found in him the inspiration he needed, while Schleiermacher found a congenial pupil; one destined to propagate his views in a higher and more effective Christian form. Before the end of that year, the events of the War of the Fourth Coalition forced Neander to move to Göttingen. There he continued his studies, made himself an expert on Plato and Plutarch, and became especially advanced in theology under the venerable GJ Planck. The impulse communicated by Schleiermacher was confirmed by Planck, and Neander seems now to have realized that the original investigation of Christian history was to form the great work of his life.

Having finished his university course, he returned to Hamburg, and passed his examination for the Christian ministry. After an interval of about eighteen months, however, he decided on an academic career, which began at Heidelberg, where two vacancies had occurred in the theological faculty of the university. He went there as a teacher of theology in 1811 and in 1812 he became a professor. In the same year (1812) he published his monograph Über den Kaiser Julianus und sein Zeitalter. The fresh insight into the history of the church evinced by this work drew attention to its author, and even before he had terminated the first year of his academical labours at Heidelberg, he was called to Berlin, where he was appointed professor of Theology. His pupils included Edmond de Pressensé.

In the year following his appointment he published a second monograph Der Heilige Bernhard und sein Zeitalter (Berlin, 1813) and then in 1818 his work on Gnosticism (Genetische Entwickelung der vornehmsten gnostischen Systeme). A still more extended and elaborate monograph than either of the preceding followed in 1822, Der Heilige Johannes Chrysostomus und die Kirche besonders des Orients in dessen Zeitalter, and again, in 1824 another on Tertullian (Antignostikus). He had in the meantime begun his great work, to which these efforts were only preparatory studies. The first volume of his Allgemeine Geschichte der christlichen Religion und Kirche embracing the history of the first three centuries, made it appearance in 1825. The others followed at intervals—the fifth, which appeared in 1842, bringing down the narrative to the pontificate of Boniface VIII. A posthumous volume edited by CFT Schneider in 1852, carried it on to the period of the council of Basel.

Aside from this work, he published in 1832 his Geschichte der Pflanzung und Leitung der christlichen Kirche durch die Apostel, and in 1837 his Das Leben Jesu Christi, in seinem geschichilichen Zusammenhang und seiner geschichtlichen Entwickelung, called forth by the famous Das Leben Jesu of David Strauss. In addition to all these he published Denkwürdigkeiten aus der Geschichte des Christentums (1823-1824, 2 vols., 1825, 3 vols., 1846); Das Eine und Mannichfaltige des christlichen Lebens (1840); papers on Plotinus, Thomas Aquinas, Theobald Thamer, Blaise Pascal, John Henry Newman, Blanco White and Thomas Arnold, and other occasional pieces (Kleine Gelegenheitsschriften, 1829), mainly of a practical, exegetical and historical character. Several of his books went through multiple editions and were translated into English.

He died in Berlin on 14 July 1850, worn out and nearly blind with incessant study. His grave is preserved in the Protestant Friedhof I der Jerusalems- und Neuen Kirchengemeinde (Cemetery No. I of the congregations of Jerusalem's Church and New Church) in Berlin-Kreuzberg, south of Hallesches Tor. After his death a succession of volumes, representing his various courses of lectures, appeared (1856–1864), in addition to the Lectures on the History of Dogma (Theologische Vorlesungen), admirable in spirit and execution, which were edited by J. L. Jacobi in 1857.