Bhupen Khakhar was born in Bombay and spent his boyhood in the area called Khetwadi with his parents and three siblings. He was the youngest of four children, and his father, Parmanand, was an engineer and was an external examiner at VJTI matunga, Mumbai. Parmanand drank heavily and died when Bhupen was only four years old. His mother Mahalaxmi was a housewife, and she soon invested all of her hopes in her youngest child.

The Khakhars were originally artisans who came from the Portuguese colony of Diu. At home they spoke Gujarati, Marathi and Hindi, but not much English. Bhupen was the first of his family to attend the University of Bombay, where he took a B.A., with Economics and Political Sciences as his special subjects. At his family's insistence he went on to take a Bachelor of Commerce and qualified as a Chartered Accountant. Khakhar worked as an accountant for many years partnering with Bharat Parikh & Associates in Baroda Gujarat India., pursuing his artistic inclinations in his free time. He became well versed in Hindi mythology and literature, and well informed about the visual arts. In 1958, Khakhar met the young Gujarati poet and painter Ghulam Mohammed Sheikh, who encouraged Khakhar's latent interest in art and encouraged him to come to the newly founded Faculty of Fine Arts in Baroda.

Khakhar's oil paintings were often narrative and autobiographical. His first exhibited works presented deities cut from popular prints, glued onto mirrors, supplemented by graffiti and gestural marks.He began to mount solo exhibitions as early as 1965. Though the artist had been largely self-taught, his work soon garnered attention and critical praise. By the 1980s Khakhar was enjoying solo shows in places as far away as London, Berlin, Amsterdam and Tokyo.The artist's work celebrated the day to day struggles of India's common man. Khakhar's early paintings depicted average people, such as the barber, the watch repairman, and even an assistant accountant with whom he worked. The painter took special care to reproduce the environments of small Indian shops in these paintings, and revealed a talent for seeing the intriguing within the mundane. His work has been compared to that of David Hockney. Though he was influenced by the British Pop movement, Khakhar understood that western versions of Pop Art would not have the same resonance in India. Khakhar's often openly homosexual themes attracted special notice. Homosexuality was something that at the time was rarely addressed in India. The artist explored his own homosexuality in extremely personal ways, touching upon both its cultural implications and its amorous and erotic manifestations. Khakhar painted homosexual love, life, and encounters from a distinctively Indian perspective

In the year 2000, Khakhar was honoured with the Prince Claus Award[2] at the Royal Palace of Amsterdam. Among other honours, he won the Asian Council's Starr Foundation Fellowship, 1986, and the prestigious Padma Shri (Indian Government's award for excellence) in 1984. His works can be found in the collections of the British Museum, The Tate Gallery, London, The Museum of Modern Art, New York, among others.