Born in Kensington in 1877, Barker served an early apprenticeship on stage with his mother (who gave poetry recitals) and with professional stock companies in London and on tour. By 1900, discouraged with commercial theatre, he joined the newly founded Stage Society as an actor and director. There his first play, The Marrying of Ann Leete, was given a private performance in 1902.

In 1904, with J.E. Vedrenne as his business manager, Barker leased the Royal Court Theatre, far to the west of the West End, for an ambitious programme of new plays and translations. There the Vedrenne-Barker management greatly enhanced Shaw's reputation as a playwright, as more than 700 of their "thousand performances" were of plays by GBS. Barker himself directed all the productions and created a number of famous Shavian roles, including John Tanner in Man and Superman, Valentine in You Never Can Tell, Adolphus Cusins in Major Barbara, and Louis Dubedat in The Doctor's Dilemma. There Barker also staged what is probably his best-known play, The Voysey Inheritance, in 1905. However, the Examiner of Plays banned his next effort, Waste (1907), which was not finally licensed for public performance until 1936.

In 1910, Barker undertook another repertory season in London, producing such new works as John Galsworthy's Justice and his own play The Madras House. Subsequently, at the Savoy Theatre, Barker's productions of three Shakespearean plays - The Winter's Tale (1912). Twelfth Night (1912) and A Midsummer Night's Dream (1914) - shattered the Victorian approach to staging Shakespeare with their virtuoso simplicity and clarity.

In 1915, Barker accepted an invitation to mount a series of productions in New York, where he presented A Midsummer Night's Dream and two Shaw plays, Androcles and the Lion and The Doctor's Dilemma. There he also fell in love with a wealthy American woman and eventually left his wife, the celebrated Shavian actress Lillah McCarthy. Barker's second marriage caused a permanent rift with Shaw, and effectively ended Barker's association with the professional theatre. Thereafter his contributions were as a writer, translator, scholar and critic.

After World War I, Barker divided his time between Britain, continental Europe, and the United States. Twice he visited Canada for theatrical purposes: adjudicating the Dominion Drama Festival in Ottawa in 1936, and lecturing on Shakespeare at the University of Toronto in 1942. After the war Barker returned to Paris, where he died in 1946. The final volume of his Shakespearean scholarship, based on the Toronto lectures, was published posthumously in 1947.