Stephen Knight was educated at Bournemouth Grammar School and the University of Oxford. He was appointed Teaching Fellow at the University of Sydney in 1963 and lecturer in English in 1964. In 1968-1969 Knight was lecturer in English at the Australian National University. He returned to the University of Sydney in 1970 where he was successively Senior Lecturer and Associate Professor. In 1987 he was appointed Robert Wallace Professor of English at the University of Melbourne.
In 1992 Knight returned to England to take up a chair at the De Montfort University at Leicester. Most of Stephen Knight's scholarly writings have been in the area of medieval English literature. His books include Merlin: Knowledge and Power through the Ages (2010). Knight has also had a long interest in crime fiction: he reviewed thrillers for the Sydney Morning Herald for ten years and he has edited several anthologies of Australian crime stories.