Hislop was born in Mumbles, Swansea in Wales, to a Scottish father, David, and a Channel Islander mother, Helen, of English descent. When he was five months old his family began to travel around the world because of his father's job as a civil engineer. During his infant years Hislop lived in Nigeria, Kuwait, Saudi Arabia and Hong Kong. On his return to the United Kingdom he was educated at Ardingly College, an independent boarding school, where he began his satirical career directing and appearing in revues alongside Nick Newman, and became Head Boy. Hislop and Newman's association continued when they went to Oxford, and they later worked together at Private Eye and on a number of comedy scriptwriting jobs. Hislop applied to read Philosophy, Politics and Economics at Oxford, but changed to English Literature before going up. He graduated from Magdalen College, Oxford with a degree in English literature in 1981.

When Hislop was 12 years old his father, David Hislop, died; his mother also died when he was quite young. His mother was born in Jersey and left in her late teens. Hislop did not know his grandparents.

Hislop's paternal grandfather, David Murdoch Hislop, died just before Hislop was born. He was Scottish and became a deacon at a Presbyterian church and a school headteacher at Newton Academy in Ayr. In the First World War he fought in Northern France with the 9th Highland Light Infantry.

Hislop's maternal grandfather, William Beddows, was originally from Lancashire. He joined the army in 1895 and fought in the Second Boer War with the Royal Lancashire Regiment in major campaigns including the Battle of Spion Kop. He moved to Jersey to serve as a sergeant, having signed up in 1906 for another ten years in the army.

At Oxford he founded and edited the magazine Passing Wind, for which he interviewed Richard Ingrams, who was then editor of Private Eye. Hislop joined the publication immediately after leaving Oxford, and became editor in 1986 upon Ingrams' departure. It was revealed in an interview with The Independent that this was despite opposition from Eye hacks Peter McKay and Nigel Dempster, with the former taking the magazine's majority shareholder, Peter Cook, out for lunch in an attempt to dissuade him from appointing Hislop. Cook pressed on however, and his new editor sacked both McKay and Dempster from the magazine without hesitation.

As editor of Private Eye Ian Hislop is the most sued man in English legal history, although he is not involved in as many libel actions as he once was. The most famous libel case involving Hislop and Private Eye was brought by the publishing magnate Robert Maxwell. After the case he quipped: "I've just given a fat cheque to a fat Czech." However the magazine's attacks on Maxwell were fully vindicated by the revelations of massive fraud that followed his death. On another occasion, when ordered to pay £600,000 in damages after being sued for libel by Sonia Sutcliffe, wife of the Yorkshire Ripper, Peter Sutcliffe, Hislop told reporters waiting outside the High Court: "If that was justice then I'm a banana." The award was, however, dropped to £60,000 on appeal. In his many court cases, Hislop has won only twice.

Hislop continues to be applauded for his wit and satire. In an interview with Third Way Magazine he said: "Satire is the bringing to ridicule of vice, folly and humbug. All the negatives imply a set of positives. Certainly in this country, you only go round saying, ‘That’s wrong, that’s corrupt’ if you have some feeling that it should be better than that. People say, ‘You satirists attack everything.’ Well, we don’t, actually. That’s the whole point."

Hislop is the only person to have appeared in every episode of Have I Got News for You' in its twenty year history, even filming an episode in the seventh series in spite of suffering from appendicitis (he had discharged himself from hospital immediately before the show). His satirical views and broad knowledge of politics complement the wry surrealism of fellow panellist Paul Merton. With the exception of one episode, in which Hislop and Merton swapped places and dress styles for comic effect, he has only ever sat in the near left seat from the audience's point of view.

Hislop's television debut was on the short-lived Channel 4 chat show Loose Talk in 1983, an experience he disliked so much that he included it on his list of most hated items when he first appeared on the BBC show Room 101. Hislop was also a screenwriter on the 1980s political satire series Spitting Image, in which puppets were used to depict well-known figures, mostly politicians. He even had a puppet of himself, which sometimes appeared as a background character in sketches.

Along with Nick Newman Hislop wrote the BBC Radio 4 series Gush, a satire based on the first Gulf War, in the style of Jeffrey Archer. With Newman he also wrote the family-friendly satirical sitcom My Dad's the Prime Minister and in the early nineties for the Dawn French vehicle Murder Most Horrid. Hislop and Newman wrote the Radio 4 series The News At Bedtime, aired over the 2009 Christmas season. The series starred Jack Dee as 'John Tweedledum' and Peter Capaldi as 'Jim Tweedledee'; the two present the "news of the day" in the world of fairy tales, while arguing with each other as did their namesakes.