Donald Eric Capps was born in Omaha, Nebraska. After studying at Lewis & Clark College (B.A. 1960) and Yale Divinity School (B.D. 1963, S.T.M. 1965) and University of Chicago (M.A. 1966), he earned his Ph.D. also at the University of Chicago in 1970. His dissertation explored a psycho-historical analysis of the personality of the English theologian John Henry Cardinal Newman, and particularly his vocational struggles.

Capps' academic career started as Instructor at the Department of Religious Studies at the Oregon State University during the Spring/Summer of 1969. He then became Instructor and Assistant Professor at the Divinity School of the University of Chicago between 1969 and 1974. Later, he was appointed Associate Professor at the Department of Religious Studies of the University of North Carolina at Charlotte, North Carolina where he lectured between 1974 and 1976. Between 1976 and 1981 he was Associate Professor and then Professor at the Graduate Seminary of Phillips University.

In 1981 he joined the faculty of Princeton Theological Seminary, where he was appointed the William Harte Felmeth Professor of Pastoral Theology. In May 2009 he retired with the status of Professor emeritus but remained lecturing as adjunct until his death. In 1989 Uppsala University, Sweden awarded him a degree of Doctor honoris causa in Theology for his contributions to the field of Psychology of Religion.

Other honors include the William F. Bier Award for contribution to Psychology of Religion, granted in 1995 by the Division 36 of the American Psychological Association; the Helen Flanders Dunbar Centennial Award, granted in 2002 by the Columbia-Presbyterian Hospital in New York; and the Joseph A. Sittler Award for Theological Leadership, granted in 2003 by Trinity Lutheran Seminary.

He was the book review editor for the Journal for the Scientific Study of Religion between 1980 and 1983 and editor for the same journal between 1983 and 1988. Furthermore, between 1990 and 1992 he was the president of the Society for the Scientific Study of Religion. He was an ordained minister of the Evangelical Lutheran Church in America beginning in 1972.

Capps died on August 26, 2015 in Trenton, New Jersey as a consequence of injuries suffered in a car crash in Princeton.