Osment was born in Los Angeles, California; the son of Theresa Osment (née Seifert), a teacher, and Michael Eugene Osment, a theater and film actor, both natives of Alabama. Osment was raised Roman Catholic. He has one sister, four years younger, actress and singer-songwriter Emily Osment. Osment’s parents described his childhood as a “good old-fashioned Southern upbringing,” and his father said that when Osment was learning to speak, he deliberately avoided using baby talk when communicating with his son.

Osment was a student at Flintridge Preparatory School in La Cañada, California. As a child, he was talented in many sports, including basketball, football, wrestling, and golf.

Osment's acting career began at the age of four, when his mother took him to a new Ikea store; a talent scout was there looking for new actors, and Osment put his name down. He got called back for an audition, and was asked to describe the biggest thing he had ever seen; Osment described an IMAX theater screen, and won the part in a Pizza Hut TV commercial, advertising their "Big Foot" pizza. The commercial launched his career; later that year he starred in the ABC TV sitcom Thunder Alley, his first role in series television. His first feature film role was as Forrest Gump's son, also named Forrest Gump, in the 1994 movie of the same name. He also had a small part in another 1994 film, Mixed Nuts. Throughout the rest of 1990s, Osment played regular and/or recurring roles in various TV series; including The Jeff Foxworthy Show and the final season of Murphy Brown, where he replaced Dylan Christopher as Murphy's son, Avery. In addition, he made numerous guest appearances on shows including The Larry Sanders Show, Walker, Texas Ranger (as a child dying from AIDS), Touched by an Angel, Chicago Hope, The Pretender, and an emotional episode of Ally Mcbeal; "Angels and Blimps", in which he played a child dying from leukemia. He starred in the 1996 film Bogus, alongside Whoopi Goldberg and Gérard Depardieu, and appeared in the 1998 made-for-TV movie The Lake, with Yasmine Bleeth, as well as I'll Remember April (1999), with future The Sixth Sense co-star Trevor Morgan.

Osment first achieved major stardom in 1999, when he appeared in the blockbuster film The Sixth Sense, co-starring Bruce Willis. For his portrayal of Cole Sear, a psychic child, Osment won Saturn Award for Best Performance by a Younger Actor. He was also nominated for the Academy Award for Best Supporting Actor, becoming the second-youngest performer ever to receive an Academy nomination for a supporting role, but lost the final Oscar vote to Michael Caine (with whom he would later work, appearing together in Secondhand Lions). One of Osment's lines in The Sixth Sense, "I see dead people", became a popular catchphrase and is often repeated or parodied on television programs and in other media. He made three minor (voice-only) guest appearances on the animated TV series Family Guy in 2000.

The 2000 Academy Awards ceremony honored another future co-star, Kevin Spacey, who, along with Helen Hunt, appeared in Osment's next film, Pay It Forward (2000). The following year, he appeared in Steven Spielberg's Artificial Intelligence: A.I., cementing his stature as one of the leading young actors in Hollywood. This role earned him his second Saturn Award for Best Younger Actor, and another critical acclaim. In reviewing the movie, critic Roger Ebert claimed that: "Osment, who is onscreen in almost every scene, is one of the best actors now working". Also in 2001, Osment starred in the Polish film, Edges of the Lord, as Romek. The movie was never released theatrically in the United States.

Osment has lent his voice to animated films such as The Country Bears, The Hunchback of Notre Dame II and The Jungle Book 2. He returned to live action with the 2003 film, Secondhand Lions.

More recently, Osment was the voice of Sora, the main protagonist of the Kingdom Hearts video game series, and later Vanitas, a villain in the series prequel, Kingdom Hearts: Birth by Sleep. Osment also voiced the character of Takeshi Jinno, in the English version of the Immortal Grand Prix anime TV series.

He next appeared in Home of the Giants, playing a high school journalist opposite Ryan Merriman and Danielle Panabaker. He is currently working on Montana Amazon as both an actor and executive producer. The film co-stars Olympia Dukakis and is expected to be released in 2010.

Osment made his Broadway debut at the Belasco Theatre in November 2008, playing the role of "Bobby", a young heroin addict, in a revival of David Mamet's American Buffalo; co-starring with John Leguizamo and Cedric the Entertainer. The show opened to mixed reviews, and a provisional statement was made on November 20, 2008, that it would close after the first week. Osment was given one sentence in the New York Times review of the production: "Mr. Osment’s facial stubble and slumping posture fail to override the impression that he’s giving a perfect School of Disney juvenile performance." Newsday, however, said "Haley Joel Osment... has a sweet, haunting neediness as a slacker who appears to recognize a kind of death in himself."[citation needed]

According to Osment's official website, he follows a mostly vegetarian diet (though he does like chicken and fish), and in an interview with Daniel Robert Epstein, Osment mentioned that he plays the guitar and piano. As of 2007, he attended New York University's Tisch School of the Arts.