Blacher was born when his parents were living within a Russian-speaking community in the Manchurian town of Niuzhuang (hence the use of the Julian calendar on his birth record). He spent his first years in China and in the Asian parts of Russia, and in 1919, he eventually came to live in Harbin. In 1922, after finishing school, he went to Berlin where he began to study architecture and mathematics. Two years later, he turned to music and studied composition with Friedrich Ernst Toch.
His career was interrupted by National Socialism. He was accused of writing degenerate music and lost his teaching post at the Dresden Conservatory.
His career resumed after 1945, and he later became director of the Music Academy of Berlin, and is today regarded as one of the most influential music figures of his time. His students include Aribert Reimann, Isang Yun, Maki Ishii, Fritz Giessler, Giselher Klebe, Heimo Erbse, Klaus Huber, Francis Burt, Gottfried von Einem, and Richard Wernick.
Blacher was married to the pianist Gerty Blacher-Hertzog. They have four children including the German actress Tatjana Blacher and the international violinist Kolja Blacher.