He was the third son of the Mughal emperor Jahangir and the Rajput princess Manmati. Marrying in 1612 Arjumand Banu Baygam, niece of Jahangir's wife Nur Jahan, he became, as Prince Khurram, one of the influential Nur Jahan clique of the middle period of Jahangir's reign. In 1622 Shah Jahan, ambitious to win the succession, rebelled, ineffectually roaming the empire until reconciled to Jahangir in 1625. After Jahangir's death in 1627, the support of Asaf Khan, Nur Jahan's brother, enabled Shah Jahan to proclaim himself emperor at Agra (February 1628).

Shah Jahan's reign was notable for successes against the Deccan states. By 1636 Ahmadnagar had been annexed and Golconda and Bijapur forced to become tributaries. Mughal power was also temporarily extended in the northwest. In 1638 the Persian governor of Qandahar, 'Ali Mardan Khan, surrendered that fortress to the Mughals. In 1646 Mughal forces occupied Badakhshan and Balkh, but in 1647 Balkh was relinquished, and attempts to reconquer it in 1649, 1652, and 1653 failed. The Persians reconquered Qandahar in 1649. Shah Jahan transferred his capital from Agra to Delhi in 1648, creating the new city of Shahjahanabad there.

In September 1657 Shah Jahan fell ill, precipitating a struggle for succession among his four sons, Dara Shikoh, Murad Bakhsh, Shah Shuja', and Aurangzeb. The victor, Aurangzeb, declared himself emperor in 1658 and strictly confined Shah Jahan in the fort at Agra until his death.

Shah Jahan had an almost insatiable passion for building. At his first capital, Agra, he undertook the building of two great mosques, the Moti Masjid and Jami' Masjid (Great Mosque), as well as the superb mausoleum known as the Taj Mahal . The Taj Mahal is the masterpiece of his reign and was erected in memory of the favourite of his three queens, Mumtaz Mahal (the mother of Aurangzeb). At Delhi, Shah Jahan built a huge fortress-palace complex called the Red Fort as well as the Jami' Masjid, which is among the finest mosques in India. Shah Jahan's reign was also a period of great literary activity, while the arts of painting and calligraphy were not neglected. His court was one of great pomp and splendour, and his collection of jewels was probably the most splendid in the world.

Indian writers have generally characterized Shah Jahan as the very ideal of a Muslim monarch. But though the splendour of the Mughal court reached its zenith under him, he also set in motion influences that finally led to the decline of the empire. His expeditions against Balkh and Badakhshan and his attempts to recover Qandahar brought the empire to the verge of bankruptcy. In religion, Shah Jahan was a more orthodox Muslim than Jahangir or Akbar but a less orthodox one than Aurangzeb. He proved a relatively tolerant ruler toward his Hindu subjects.