Thompson was born in Chicago in 1938, but moved to Los Angeles in 1945 where he graduated from Los Angles High School in 1957. He attended Pomona College and majored in anthropology, philosophy, and English literature. Upon graduation he received a Woodrow Wilson Fellowship for graduate study in English and cultural history at Cornell University in 1962. In 1964 he was awarded a Woodrow Wilson Dissertation Fellowship to do his doctoral research in Dublin in 1964/65. He received his Ph.D. from Cornell in 1966 and published his first book The Imagination of an Insurrection: Dublin, Easter 1916 in 1967. His second book, At the Edge of History, was a finalist for the National Book Award in 1972, and his novel, Islands out of Time, won the Oslo International Poetry Festival Award in 1986.
Thompson has taught at Cornell, MIT, and York University in Toronto. His interdisciplinary interests are indicated in that he has served as visiting professor of religion at Syracuse University (1973), visiting professor of Celtic Studies at St. Michael's College, the University of Toronto (1984), visiting professor of political science at the University of Hawaii at Manoa (1985), Rockefeller Scholar at the California Institute of Integral Studies in San Francisco (1992-1995), and Lindisfarne Scholar-in-Residence at the Cathedral of St. John the Divine in New York in the autumn of each year from 1992 to 1996. In 1995 he designed an evolution of consciousness curriculum for the Ross School in East Hampton, New York and still serves as a Founding Mentor and Visiting Scholar and visits the school three times a year.