Nicolson was born in Tehran, Persian Empire, the youngest son of diplomat Arthur Nicolson, 1st Baron Carnock. He was educated at Wellington College and Balliol College, Oxford.
In 1909 Nicolson joined HM Diplomatic Service. He served as attaché at Madrid then Third Secretary at Constantinople. In 1913, Nicolson married the novelist Vita Sackville-West. Nicolson and his wife practised what today would be called an open marriage with both having affairs, often with people of their same sex. A diplomatic career was an honorable and prestigious one in Edwardian Britain, but Sackville-West's parents were aristocrats who wanted their daughter to marry a fellow aristocrat from an old noble family; they gave a reluctant approval to their marriage.
During the First World War, he served at the Foreign Office in London. In December 1917, Nicolson had to explain to Sackville-West that he had contracted a venereal disease as a result of an anonymous homosexual encounter, and he had probably passed it to her. As it turned out, he hadn't.
Promoted First Secretary in 1920, he was appointed private secretary to Sir Eric Drummond, first Secretary-General of the League of Nations, but was recalled to the Foreign Office in June 1920. In the same year, Sackville-West become involved in an intense relationship with Violet Trefusis that nearly wrecked her marriage. Nicolson himself was no stranger to homosexual affairs. Among others, he was involved in a long-term relationship with Raymond Mortimer, whom both he and Vita affectionately referred to as "Tray".
Nicolson and Vita discussed their shared homosexual tendencies frankly with each other, and remained happy together. They were famously devoted to each other, writing almost every day when separated due to Nicolson's long diplomatic postings abroad, or Vita's insatiable wanderlust. Eventually, he gave up diplomacy, partly so they could live together in England.
In 1925, he was promoted Counsellor and posted to Tehran as Chargé d'affaires. That same year, General Reza Khan deposed the last Qajar Shah, Ahmed, to take the Peacock Throne for himself, and, though this was not entirely proper for a diplomat's wife, Sackville-West became deeply involved in the coronation of Reza Khan as the new Shah. Nicolson personally disliked Reza Khan, calling him "a bullet-headed man with the voice of an asthmatic child".
In the summer of 1927 he was recalled to London and demoted to First Secretary for criticising his Minister, Sir Percy Loraine, in a dispatch. However he was posted to Berlin as Chargé d'affaires in 1928 and promoted Counsellor again, but resigned from the Diplomatic Service in September 1929.
Nicolson entered the House of Commons as National Labour Member of Parliament (MP) for Leicester West in the 1935 election. In the latter half of the 1930s he was among a relatively small number of MPs who alerted the country to the threat of fascism.
In 1944, during the Battle of Monte Cassino, it was widely, if erroneously believed that the Germans were using the Monte Cassino abbey in Italy as an observation post to direct fire down at the Allied forces in the valley below, and many demanded that the abbey be bombed in order to save the lives of the Allied soldiers that were attempting to advance up the valley to take the heights of Monte Cassino, which was a key point in the Gustav line.
In February 1944, Nicoloson caused much controversy with a column in The Spectator saying art was irreplaceable, but human life was expendable, writing he was opposed to bombing Monte Cassino abbey as the abbey was a great work of art that contained many works of art that could never be replaced, even if that meant the death of his own son, Nigel Nicolson who was serving in the 8th Army as it was fighting the Battle of Monte Cassino, saying it was morally better to take thousands of dead and wounded than to destroy the abbey of Monte Cassino. Much to Nicolson's chagrin, the Monte Cassino abbey was destroyed by an American bombing raid on 15 February 1944.
He lost his seat in the 1945 election. Having joined the Labour Party, he stood in the Croydon North by-election in 1948, but lost once again. In 1960, at the Paris summit, Nicolson wrote about the behaviour of the Soviet Premier Nikita Khrushchev that he was "a little mad" and the "exchange of insults is not the best method of conducting relations between sovereign states".
Encouraged in his literary ambitions by his wife Vita Sackville-West, also a writer, Nicolson published a biography of French poet Paul Verlaine in 1921, to be followed by studies of other literary figures. In 1933, he wrote an account of the Paris Peace Conference entitled Peacemaking 1919. Nicolson is also remembered for his 1932 novel Public Faces , which foreshadowed the nuclear bomb.
He died, aged 81, at Sissinghurst Castle, Kent, U.K.