Born to a Neapolitan middle-class family, Basile was, during his career, a courtier and soldier to various Italian princes, including the doge of Venice. According to Benedetto Croce he was born in 1575, while other sources have February 1566. In Venice he began to write poetry. Later he returned to Naples to serve as a courtier under the patronage of Don Marino II Caracciolo, prince of Avellino, to whom he dedicated his idyll L'Aretusa (1618). By the time of his death he had reached the rank of "count" Conte di Torrone.
He is chiefly remembered for writing the collection of Neapolitan fairy tales titled Lo cunto de li cunti overo lo trattenemiento de peccerille (Neapolitan for "The Tale of Tales, or Entertainment for Little Ones"), published posthumously in two volumes by his sister Adriana in Naples, Italy in 1634 and 1636 under the pseudonym Gian Alesio Abbatutis.
He recorded and adapted the tales, believed to have been orally transmitted around Crete and Venice, several of which were also later adapted by Charles Perrault and the Brothers Grimm, the latter making extensive, acknowledged use of Basile's collection. Examples of this are versions of Cinderella, Rapunzel, Puss in Boots, Sleeping Beauty, and Hansel and Gretel.
While other collections of stories have included tales that would be termed fairy tales, his work is the first collection in which all the stories fit in that category. Although he did not transcribe them from the oral tradition as a modern collector would, he wrote them in the dialect, and in many respects was the first writer to preserve oral intonations.