Diogenes was a controversial figure. He was banished, or fled from, Sinope over debasement of currency. He was the son of the mintmaster of Sinope. After his hasty departure from Sinope he moved to Athens where he proceeded to criticize many conventions of Athens of that day. There are many tales about him following Antisthenes and becoming his "faithful hound".[Diogenes was captured by pirates and sold into slavery, eventually settling in Corinth. There he passed his philosophy of Cynicism to Crates, who taught it to Zeno of Citium, who fashioned it into the school of Stoicism, one of the most enduring schools of Greek philosophy.

No writings of Diogenes survive, but there are some details of his life from anecdotes (chreia), especially from Diogenes Laërtius' book Lives and Opinions of Eminent Philosophers and some other sources. Diogenes made a virtue of poverty. He begged for a living and often slept in a large ceramic jar, or pithos, in the marketplace.He used his simple lifestyle and behavior to criticize the social values and institutions of what he saw as a corrupt, confused society. He had a reputation for sleeping and eating wherever he chose in a highly non-traditional fashion and took to toughening himself against nature. He declared himself a cosmopolitan and a citizen of the world rather than claiming allegiance to just one place.

He modeled himself on the example of Heracles, believing that virtue was better revealed in action than in theory. He became notorious for his philosophical stunts, such as carrying a lamp during the day, claiming to be looking for a "man" (often rendered in English as "looking for an honest man"). He criticized Plato, disputed his interpretation of Socrates, and sabotaged his lectures, sometimes distracting listeners by bringing food and eating during the discussions. Diogenes was also noted for having mocked Alexander the Great, both in public and to his face when he visited Corinth in 336 BC.

Nothing is known about Diogenes's early life except that his father, Hicesias, was a banker.

At some point (the exact date is unknown), Hicesias and Diogenes became involved in a scandal involving the adulteration or debasement of the currency, & Diogenes was exiled from the city and lost his citizenship and all his material possessions.This aspect of the story seems to be corroborated by archaeology: large numbers of defaced coins (smashed with a large chisel stamp) have been discovered at Sinope dating from the middle of the 4th century BC, and other coins of the time bear the name of Hicesias as the official who minted them. During this time there was much counterfeit money circulating in Sinope. The coins were deliberately defaced in order to render them worthless as legal tender. Sinope was being disputed between pro-Persian and pro-Greek factions in the 4th century, and there may have been political rather than financial motives behind the act

According to one story, Diogenes went to the Oracle at Delphi to ask for her advice and was told that he should "deface the currency". Following the debacle in Sinope, Diogenes decided that the oracle meant that he should deface the political currency rather than actual coins. He traveled to Athens and made it his life's goal to challenge established customs and values. He argued that instead of being troubled about the true nature of evil, people merely rely on customary interpretations. Diogenes arrived in Athens with a slave named Manes who escaped from him shortly thereafter. With characteristic humor, Diogenes dismissed his ill fortune by saying, "If Manes can live without Diogenes, why not Diogenes without Manes?" Diogenes would mock such a relation of extreme dependency. He found the figure of a master who could do nothing for himself contemptibly helpless. He was attracted by the ascetic teaching of Antisthenes, a student of Socrates. When Diogenes asked Antisthenes to mentor him, Antisthenes ignored him and reportedly "eventually beat him off with his staff". Diogenes responded, "Strike, for you will find no wood hard enough to keep me away from you, so long as I think you've something to say." Diogenes became Antisthenes's pupil, despite the brutality with which he was initially received. He considered his avoidance of earthly pleasures a contrast to and commentary on contemporary Athenian behaviors. This attitude was grounded in a disdain for what he regarded as the folly, pretence, vanity, self-deception, and artificiality of human conduct.