Taibbi spent his childhood in the suburbs of Boston, Massachusetts. He attended Concord Academy and Bard College at Annandale-on-Hudson, New York, then spent a year abroad at Saint Petersburg Polytechnical University. His father is Mike Taibbi, an NBC television reporter.

In 1992 Taibbi moved to Uzbekistan, but was forced to leave six months later after writing articles critical of the country's president, Islom Karimov. Afterwards, Taibbi worked for The Moscow Times as a sports editor, before moving on to work in Russia and Mongolia as a professional athlete and as a correspondent for Montsame, the Mongolian National News Agency.

Taibbi then took a break from journalism and turned to professional sports. He was one of the first Americans to play Russian pro baseball, playing center field for Spartak Moscow. While playing professional basketball in Ulan Bator, Mongolia, Taibbi contracted a serious case of pneumonia and returned to Boston for treatment. After recovering with his family, he returned to Russia and became editor of the expat paper Living Here. He then joined Mark Ames in 1997 to co-edit the controversial English-language Moscow-based, bi-weekly free newspaper, The eXile. Taibbi said about that experience, "We were out of the reach of American libel law, and we had a situation where we weren’t really accountable to our advertisers. We had total freedom."

In 2002, he returned to the U.S. to start the satirical bi-weekly The Beast in Buffalo, New York. He eventually left The Beast, declaring that "Running a business and writing is too much." Taibbi continued as a freelancer, writing for The Nation, Playboy, New York Press (where he wrote a regular political column for over two years), Rolling Stone, New York Sports Express (where he was Editor at Large), but with reservations. "For me, it’s a career failure. I wanted to be a novelist," he announced at an NYU lecture. In 2004, while Taibbi followed the democratic campaign of the 2004 US presidential election, he wore a gorilla suit in front of campaign staffers and took LSD at a major debate.[dead link]

Taibbi left the New York Press in August 2005, shortly after his editor Jeff Koyen was forced to quit over issues raised by Taibbi's column "The 52 Funniest Things About The Upcoming Death of The Pope." "I have since learned that there would not have been an opportunity for me to stay anyway," Taibbi later wrote.

Taibbi went on to serve as a Contributing Editor at Rolling Stone, penning feature-length articles on both domestic and international affairs and a weekly political column titled "The Low Post" for the magazine's Web site. Taibbi continues to write for the print edition of Rolling Stone, but has stopped contributing to his online column. A later online column titled "Year of the Rat" was meant to document the 2008 election season, but it ended after only a few postings.

Taibbi served as a special correspondent for Real Time with Bill Maher offering political coverage of the 2008 presidential campaign, and he has made several guest appearances on MSNBC's The Rachel Maddow Show to discuss the 2009 economic crisis.

In 2009 in Rolling Stone he described Goldman Sachs as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Taibbi also writes a column called the "The Sports Blotter" for the free weekly newspaper the Boston Phoenix. The column provides a rundown of the arrests, civil suits, and criminal trials involving professional athletes.

In 2008, Taibbi was awarded the National Magazine Award in the category "Columns and Commentary" for his Rolling Stone columns.