Chico Freeman was born Earl Lavon Freeman Jr. on July 17, 1949, in Chicago, Illinois, the son of tenor saxophonist Von Freeman. His uncle George Freeman played guitar and his uncle Bruz Freeman played drums; his brother Everett introduced him to the trumpet as a child, and he later switched to the saxophone. Freeman enrolled at Northwestern University in 1967 on a mathematics scholarship, changed his major to music during his time there, and graduated in 1972 proficient on saxophone, trumpet, and piano. He went on to earn a master's degree in composition and theory at Governors State University, studying there with pianist Muhal Richard Abrams, and after graduating taught at the Association for the Advancement of Creative Musicians' School of Music in Chicago, placing him inside the AACM's circle of composer-improvisers early in his career. He also played and studied with fellow Chicago saxophonist Fred Anderson.

Freeman released his debut album as a leader, Morning Prayer, in 1976 on the Japanese label WhyNot, recorded in Chicago with a band drawn largely from the AACM: Henry Threadgill on alto and baritone saxophone, Abrams on piano, Steve McCall on drums, and Cecil McBee on bass. He moved to New York the following year and signed a multi-album deal with the independent India Navigation label, issuing Chico (1977), Kings of Mali (1978), and Spirit Sensitive (1979) in quick succession, while also recording for Lester Koenig's Contemporary label, releasing Beyond the Rain (1979) and Peaceful Heart, Gentle Spirit (1980). According to AllMusic, Freeman had already worked as a sideman in Elvin Jones's group before establishing himself as a leader; he later recorded as a leader with Jones on drums on Beyond the Rain (1979), The Pied Piper (1986), and Tales of Ellington (1987). He also worked in this period with Sun Ra, Sam Rivers, Jack DeJohnette, and Don Pullen, the last of whom co-led the 1978 quartet album Warriors with Freeman, bassist Fred Hopkins, and drummer Bobby Battle.

The years around 1980 to 1982 were Freeman's most prolific as a leader. The Outside Within (1981, India Navigation), a quartet date with Jack DeJohnette, John Hicks, and Cecil McBee featuring liner notes by Amiri Baraka, was named Record of the Year by Stereo Review in 1981. The following year brought Destiny's Dance (Contemporary), whose personnel, per Wikipedia's citation of The Guinness Who's Who of Jazz, included Wynton Marsalis and vibraphonist Bobby Hutcherson, and Tradition in Transition (Elektra Musician), described by AllMusic as one of his most significant records. That same year Freeman appeared on the Columbia album Fathers & Sons, on which he and his father shared one side of the record with Wynton Marsalis, his brother Branford, and their father Ellis Marsalis on the other, and he played a central role in the filming of the "Young Lions" concert in Central Park, alongside Bobby McFerrin, Wynton Marsalis, Paquito D'Rivera, Kevin Eubanks, and Anthony Davis.

When European promoters began organizing all-star touring packages in the mid-1980s, Freeman founded the Leaders, a cooperative sextet of bandleader-composers with Cecil McBee, pianist Kirk Lightsey, trumpeter Lester Bowie, alto saxophonist Arthur Blythe, and drummer Famoudou Don Moye; the group's debut, Mudfoot (1986, BlackHawk), was followed by Out Here Like This... (1988, Black Saint) and further recordings into the 2000s. The same year, Freeman reunited with his former employer Elvin Jones for the quartet date The Pied Piper, having already recorded 1984's Tangents for Elektra Musician featuring Bobby McFerrin and altoist Steve Coleman. In 1989 Freeman formed Brainstorm, an electric band mixing funk, Afro-Latin rhythm, and post-bop with vocalist-keyboardist Delmar Brown, percussionist Norman Hedman, bassist Chris Walker, and drummer Archie Walker; the group released three albums, The Mystical Dreamer (1989), Sweet Explosion (1990), and Threshold (1993). That same year also brought two father-son reunions on record, Freeman & Freeman and You'll Know When You Get There, both featuring Von Freeman alongside Chico.

In 1992 Freeman co-founded another all-star collective, Roots, with Sam Rivers, Arthur Blythe, Nathan Davis, and Don Pullen, debuting with Salutes the Saxophone, issued for the 100th anniversary of Adolphe Sax's invention of the instrument; the group toured and recorded through the mid-1990s with a lineup that also included bassist Santi Debriano. Freeman issued The Emissary in 1996, a post-bop, African, and Latin fusion that drew strong reviews in Europe, and began teaching at New School University in New York in 1999. By the early 2000s he had relocated to Europe, touring the United States periodically; his first 21st-century leader date was Oh, By the Way (2001), credited to Chico Freeman y Guataca, a Latin jazz band he built around pianist Hilton Ruiz. A reconstituted lineup of the Leaders, with trumpeter Eddie Henderson replacing the late Bowie, drummer Billy Hart, altoist Bobby Watson, and pianist Fred Harris joining Freeman and McBee, released the widely praised Spirits Alike in 2006, the same year Freeman also issued the quintet album Out of Many Comes the One.

Freeman has continued recording into the 2010s and 2020s, including the duo album The Arrival (2015, Intakt) with Swiss bassist Heiri Känzig, and All in the Family (2015, Southport), a session with his uncle, guitarist George Freeman, and drummer Hamid Drake. He also recorded 2010's David Murray, Chico Freeman with Özay, pairing him with David Murray, and 1992's Up and Down (Black Saint), a trio session with pianist Mal Waldron and vocalist Tiziana Ghiglioni.

Freeman's tenor sound, as AllMusic critic Thom Jurek describes it, is "gritty and exuberant, yet intimate and resonant," capable of moving between anguished cries and tender balladry within a single phrase, a tone shaped as much by the Chicago blues clubs he worked as a teenager as by his father's bebop and hard bop, John Coltrane's modal explorations, and the AACM's collective free improvisation. His catalog moves fluidly between all three idioms: the free-leaning quartet and quintet dates for India Navigation and Contemporary in the late 1970s and early 1980s, the funk- and Latin-inflected fusion of Brainstorm and Guataca, and straight-ahead cooperative supergroup work with the Leaders and Roots. Years spent working for Latin bandleaders including Tito Puente, Eddie Palmieri, Ray Barretto, Chucho Valdés, and Celia Cruz added an Afro-Latin rhythmic vocabulary that surfaces throughout his later leader dates.