Haugen was born in Sioux City, Iowa, to Norwegians from the town of Oppdal in Norway. When he was a young child, the family moved back to Oppdal for a few years, but then returned to the United States. He attended Morningside College in Sioux City but transferred to St. Olaf College to study with Ole Edvart Rølvaag. He earned his B.A. in 1928 and immediately went on to graduate studies in Scandinavian languages under George T. Flom at the University of Illinois at Urbana-Champaign, where he was awarded the Ph.D. in 1931.
In 1931 Haugen joined the faculty of the University of Wisconsin–Madison, where he stayed until 1962. He was made Victor S. Thomas Professor of Scandinavian and Linguistics at Harvard University in 1964, and stayed here until his retirement in 1975. Haugen served as president of the Linguistic Society of America, the American Dialect Society, and the Society for the Advancement of Scandinavian Study. Haugen was also a member of the Board of Editors of the Norwegian-American Historical Association. 
Haugen is credited with having pioneered the field of sociolinguistics and being a leading scholar within the field of Norwegian-American studies, including Old Norse studies. Perhaps his most important work was The Norwegian language in America: A Study in Bilingual Behavior (ISBN 0-253-34115-9). In addition to several important works within these fields, he wrote the authoritative work on the dialect of his ancestral home of Oppdal and a book entitled The Ecology of Language, with which he pioneered a new field of linguistics later called Ecolinguistics. Einar Haugen also wrote Norwegian English Dictionary/Norsk engelsk ordbok (ISBN 0-299-03874-2).
The Einar and Eva Lund Haugen Memorial Scholarship has been established by the Norwegian-American Historical Association to honor Einar Haugen and his wife Eva Lund Haugen. Additionally, the Boston Chapter of the American-Scandinavian Foundation voted to establish the Einar and Eva Haugen Prize. The prize is awarded annually to an undergraduate or graduate student for excellence in the field of Scandinavian languages and literature at Harvard University.
Lovoll, Odd S. The History of the Norwegian-American People (Minneapolis, MN: University of Minnesota Press. 1999)