Vermes was born in Makó, Hungary, in 1924 to Jewish parents. All three were baptised as Roman Catholics when he was seven. His mother and journalist father died in the Holocaust. After the Second World War, he became a Roman Catholic priest, studied first in Budapest and then at the College St Albert and the Catholic University of Leuven in Belgium, where he read Oriental history and languages and in 1953 obtained a doctorate in theology with a dissertation on the historical framework of the Dead Sea Scrolls. He left the Catholic Church in 1957; and, reasserting his Jewish identity, came to Britain and took up a teaching post at the University of Newcastle upon Tyne. He married Pamela Hobson in 1958. In 1965 he joined the Faculty of Oriental Studies at Oxford University, rising to become the first professor of Jewish Studies before his retirement in 1991. In 1970 he became a member of the Liberal Jewish Synagogue of London.
Vermes passed away on 8 May 2013 after a recurrence of cancer.