Toole's novels remained unpublished during his lifetime. Some years after his death by suicide, the author's mother Thelma Toole brought the manuscript of A Confederacy of Dunces to the attention of the novelist Walker Percy, who ushered the book into print. In 1981 Toole was posthumously awarded the Pulitzer Prize for Fiction.
Toole, known throughout his life to friends and family as "Ken", lived a sheltered childhood in Uptown New Orleans. His mother, Thelma Ducoing Toole, was a charmingly flamboyant but narcissistic woman, who doted on her only child. Toole's father worked as a car salesman and mechanic before succumbing to deafness and failing health, while his mother supplemented the family income with music lessons.
After earning an undergraduate degree from Tulane University, Toole received a master's degree at Columbia University, and spent a year as assistant professor of English at the University of Louisiana at Lafayette (then University of Southwestern Louisiana) in Lafayette, Louisiana. Toole's next academic post was in New York City, where he taught at Hunter College. Although he pursued a doctorate at Columbia, his studies were interrupted by his being drafted into the U.S. Army in 1961. Toole served two years in Puerto Rico teaching English to Spanish-speaking recruits.
Following his military service, Ken Toole returned to New Orleans to live with his parents and teach at Dominican College. He spent much of his time hanging around the French Quarter with musicians and, on at least one occasion, helped a musician friend with his second job selling tamales from a cart. While at Tulane University, Toole had worked briefly in a men's clothing factory. Both of these experiences inspired memorable scenarios in his comic novel A Confederacy of Dunces.
Toole sent the manuscript of his novel, written during the early 1960s, to Simon and Schuster and, despite initial excitement about the work, the publisher eventually rejected it, commenting that it "isn't really about anything." Toole's health began to deteriorate as he lost hope of seeing his work—which he considered a comic masterpiece—in print. He stopped teaching at Dominican, quit his doctoral classes and began to drink heavily while being medicated for severe headaches.
Toole's biographers, Rene Pol Nevils and Deborah George Handy, have suggested that a factor in Toole's depression was confusion about his sexuality and identity. In their biography, Ignatius Rising: The Life of John Kennedy Toole, they tracked down and interviewed many of Ken Toole's acquaintances. While one friend suggested that his domineering mother left no emotional room for any other woman in Toole's life (although he did date some women exclusively in his lifetime), others have disputed the suggestion that he was a homosexual, including David Kubach, a longtime friend who also served with Toole in the army. According to Kubach, the authors of Ignatius Rising were not personally acquainted with Toole, and "not knowing him makes a big difference." 
Toole disappeared on January 20, 1969, after a dispute with his mother. Receipts found in his car show that Toole drove to the west coast and then to Milledgeville, Georgia. Here he visited the home of deceased writer Flannery O'Connor. It was during what is assumed to be a trip back to New Orleans that Toole stopped outside Biloxi, Mississippi, on March 26, 1969, and committed suicide by running a garden hose from the exhaust pipe in through the window of the car in which he was sitting. An envelope was left on the dashboard of the car and was marked "to my parents". However, the suicide note inside the envelope was destroyed by his mother, who made conflicting statements as to its general contents. He was buried at Greenwood Cemetery in New Orleans.