Baxter was born in Dunedin to Archibald Baxter and Millicent Brown and grew up near Brighton, 20 km south of Dunedin city.
He was named after James Keir Hardie, a founder of the British Labour Party.
His father had been a conscientious objector during the First World War.
His mother had studied Latin, French and German at the Presbyterian Ladies' College, Sydney, the University of Sydney and Newnham College, University of Cambridge.

On his first day of school, Baxter burned his hand on a stove and later used this incident to represent the failure of institutional education.
As a child he contrasted the social order represented by his maternal grandfather with the clan mentality of his Scottish father and frequently drew analogies between the Highland clans and the Māori tribes.
Baxter stated that he began writing poetry at the age of seven, and he accumulated a large body of technically accomplished work both before and during his teenage years.

In 1944, at age eighteen he joined the University of Otagoand that year he published his first collection of poetry, Beyond the Palisade, to much critical acclaim.
His work during this time was, as with his contemporary compatriots, most notably the experimental novelist Janet Frame, largely influenced by the modernist works of Dylan Thomas.
He was a member of the so-called "Wellington Group" of writers that also included Louis Johnson, W.H. Oliver and Alistair Campbell.
Baxter typically wrote short lyrical poems or cycles of the same rather than longer poems; he failed to complete his course work at the University of Otago, due to increasing alcoholism and was forced to take a range of odd jobs from 1945–7, most notably a cleaner at Chelsea Sugar Refinery, which inspired the poem "Ballad of the Stonegut Sugar Works".

In 1948 he married Jacqueline Sturm, and his interest in Christianity culminated in his joining the Anglican church during that same year.
In February 1951 Baxter enrolled at Wellington Teachers' College.
In 1952 a selection of poems in a collaborative volume, Poems unpleasant, was published.
Having completed his course at the teachers' college in December, Baxter spent 1953 in full-time study at Victoria University College and published his third major collection, The fallen house.
In 1954 he was appointed assistant master at Epuni School, Lower Hutt and during that time joined Alcoholics Anonymous, being deeply inspired by its principles.
He received a BA in 1956.

By 1955 he had garnered a substantial legacy and could afford a comfortable house in Ngaio, Wellington.
He left Epuni School early in 1956 to write and edit primary school bulletins for the Department of Education's School Publications Branch.
This period is likely to have influenced his writing providing material for numerous attacks on bureaucracy.
In 1957 Baxter took a course in Roman Catholicism, and his collection of poems In Fires of No Return, published in 1958, was influenced by his new faith.
This was his first work to be published internationally, though English critics were largely nonplussed.
His wife, a committed Anglican, was dismayed by his Catholicism, and they divorced in 1957.
Through the late 50s and 60s Baxter visited the Southern Star Abbey a Cistercian monastery at Kopua near Central Hawke's Bay.
He was received into the Catholic church in 1958.

In the same year, Baxter received a UNESCO stipend and began an extended journey through Asia, and especially India, where Rabindranath Tagore's university Shantiniketan was one of the inspirations for Baxter's later community at Jerusalem.
Here he was reconciled with his wife and contracted dysentery.
His writing after returning from India was more overtly critical of New Zealand society.
In the 1960s he became a powerful and prolific writer of both poems and drama, and it was through his radio play Jack Winter's dream that he became internationally known.

The first half of the 1960s saw Baxter struggling to make ends meet on his postman's wage, having refused to take work as a schoolmaster.
However, it was at this time that the collection
Baxter was born in Dunedin to Archibald Baxter and Millicent Brown and grew up near Brighton, 20 km south of Dunedin city. He was named after James Keir Hardie, a founder of the British Labour Party. His father had been a conscientious objector during the First World War. His mother had studied Latin, French and German at the Presbyterian Ladies' College, Sydney, the University of Sydney and Newnham College, University of Cambridge.
On his first day of school, Baxter burned his hand on a stove and later used this incident to represent the failure of institutional education. As a child he contrasted the social order represented by his maternal grandfather with the clan mentality of his Scottish father and frequently drew analogies between the Highland clans and the Māori tribes. Baxter stated that he began writing poetry at the age of seven, and he accumulated a large body of technically accomplished work both before and during his teenage years.
In 1944, at age eighteen he joined the University of Otagoand that year he published his first collection of poetry, Beyond the Palisade, to much critical acclaim. His work during this time was, as with his contemporary compatriots, most notably the experimental novelist Janet Frame, largely influenced by the modernist works of Dylan Thomas. He was a member of the so-called "Wellington Group" of writers that also included Louis Johnson, W.H. Oliver and Alistair Campbell. Baxter typically wrote short lyrical poems or cycles of the same rather than longer poems; he failed to complete his course work at the University of Otago, due to increasing alcoholism and was forced to take a range of odd jobs from 1945–7, most notably a cleaner at Chelsea Sugar Refinery, which inspired the poem "Ballad of the Stonegut Sugar Works".
In 1948 he married Jacqueline Sturm, and his interest in Christianity culminated in his joining the Anglican church during that same year. In February 1951 Baxter enrolled at Wellington Teachers' College. In 1952 a selection of poems in a collaborative volume, Poems unpleasant, was published. Having completed his course at the teachers' college in December, Baxter spent 1953 in full-time study at Victoria University College and published his third major collection, The fallen house. In 1954 he was appointed assistant master at Epuni School, Lower Hutt and during that time joined Alcoholics Anonymous, being deeply inspired by its principles. He received a BA in 1956.
By 1955 he had garnered a substantial legacy and could afford a comfortable house in Ngaio, Wellington. He left Epuni School early in 1956 to write and edit primary school bulletins for the Department of Education's School Publications Branch. This period is likely to have influenced his writing providing material for numerous attacks on bureaucracy. In 1957 Baxter took a course in Roman Catholicism, and his collection of poems In Fires of No Return, published in 1958, was influenced by his new faith. This was his first work to be published internationally, though English critics were largely nonplussed. His wife, a committed Anglican, was dismayed by his Catholicism, and they divorced in 1957. Through the late 50s and 60s Baxter visited the Southern Star Abbey a Cistercian monastery at Kopua near Central Hawke's Bay. He was received into the Catholic church in 1958.
In the same year, Baxter received a UNESCO stipend and began an extended journey through Asia, and especially India, where Rabindranath Tagore's university Shantiniketan was one of the inspirations for Baxter's later community at Jerusalem. Here he was reconciled with his wife and contracted dysentery. His writing after returning from India was more overtly critical of New Zealand society. In the 1960s he became a powerful and prolific writer of both poems and drama, and it was through his radio play Jack Winter's dream that he became internationally known.
The first half of the 1960s saw Baxter struggling to make ends meet on his postman's wage, having refused to take work as a schoolmaster. However, it was at this time that the collection 
James K. Baxter