Assayas was born in Paris, France, the son of French director/screenwriter Raymond Assayas, alias Jacques Rémy (1911–1981). His father was of Turkish-Greek Jewish origin who had settled in Italy and his mother was of Protestant Hungarian origin. Assayas started his career in the industry by helping his father. He ghostwrote episodes for TV shows his father was working on when his health failed. In a 2010 interview, Assayas stated that his main political influences when growing up were Guy Debord and George Orwell. Speaking of the 1968 May uprising to overthrow General de Gaulle, Assayas in the same interview stated: "I was defined by the politics of May '68, but for me May '68 was an anti-totalitarian uprising. People seemed to forget that at the occupied Odéon theater, you had crossed flags-black and red, and I was on the side of the black element.".
He made his debut in 1986, after directing some short films and writing for the influential film magazine Cahiers du cinéma.
Assayas's film Cold Water was screened in the Un Certain Regard section at the 1994 Cannes Film Festival.
His biggest hit to date has been Irma Vep, starring Hong Kong star Maggie Cheung, which manages to be a tribute both to French director Louis Feuillade and to Hong Kong cinema.
While working at Cahiers du cinéma, Assayas wrote lovingly about European film directors he admires but also about Asian directors. One of his films, HHH: A Portrait of Hou Hsiao-hsien, is a documentary about Taiwanese filmmaker Hou Hsiao-hsien.
He married Hong Kong movie actress Maggie Cheung in 1998. They divorced in 2001, but their relationship remained amicable, and in 2004 Cheung made her award-winning film Clean with him.
He met actress-director Mia Hansen-Løve when Hansen-Løve, seventeen at the time, starred in Assayas's 1998 feature Late August, Early September, but "[they] didn't get together until [she] was 20". They separated in 2016.
He directed and co-wrote the acclaimed 2010 French television miniseries Carlos, about the life of the terrorist Ilich Ramírez Sánchez. Venezuelan actor Édgar Ramírez won the César Award for Most Promising Actor in 2011 for his performance as Carlos.
In April 2011, it was announced that he would be a member of the jury for the main competition at the 2011 Cannes Film Festival.
His 2012 film, Something in the Air, was selected to compete for the Golden Lion at the 69th Venice International Film Festival. Assayas won the Osella for Best Screenplay at Venice. His 2014 film Clouds of Sils Maria was selected to compete for the Palme d'Or in the main competition section at the 2014 Cannes Film Festival. Sils Maria won the Louis Delluc Prize and garnered six César Award nominations including Best Film, Best Director, and Best Original Screenplay. The film won a César Award for Best Supporting Actress for American actress Kristen Stewart. In 2016, Assayas won Best Director Award (Cannes Film Festival) for Personal Shopper, which also starred Kristen Stewart.
On June 29, 2017, it was announced that Olivier Assayas would preside over the 2017 70th anniversary Locarno Film Festival.
In an interview with Nick Pinkerton of Reverse Shot, Assayas talked about his influences:
That radicality in cinema involved just being outside of the world of modern images, and the key to it was the work of Robert Bresson, who has been by far the most important influence in my work, and intellectually it's been the influence of Guy Debord—basically, you know, it's been Debord-Bresson, Bresson-Debord, the things that've always defined my framework, the way I look at the world.