Zahn was born and raised in the Chicago area. He earned a B.S. in Physics from the University of Michigan in 1973 and an M.S. in Physics from the University of Illinois in 1975. Zahn began writing science fiction in 1975 as a hobby. As he worked towards his doctorate in physics, he began to devote more of his time to writing. In 1978, he sold his first short story to Analog. He was considering taking a year off to write after his doctorate when his thesis advisor died suddenly in mid-1979 (coincidentally, the same day he sold his second story).

In 1980, he left the university to begin his year of full-time writing. His wife Anna was working full-time to support him during this endeavor. He wrote 18 stories in that year and brought in $2,000 (doubling the goal he had set of $1,000). He knew he could earn a living at writing eventually, but it took him until 1984 to achieve that goal.

His best known work is The Thrawn Trilogy, the Star Wars novels that actually revived flagging interest in the Star Wars universe. He won a Hugo award in 1984 for the novella Cascade Point and has been nominated for Hugos on two other occasions. He currently lives with his family in the Pacific Northwest