Stephen J. Stein was born in Chillicothe, Missouri, on March 22, 1940. His father, Frederick Carl Stein, was a Lutheran clergyman and air force chaplain. After World War II, his father retired as a Lieutenant Colonel in the chaplaincy and continued his professional life as a Lutheran minister at several locations including St. Joseph, Missouri; St. Louis, Missouri; Evansville, Indiana; and Detroit, Michigan. Stein's mother, Irene Kroggel Stein, was a grade school teacher and taught for several years before she was married. Stein was the third son in a family of four boys. Due to his father's profession, his family moved numerous times. In Austin, Texas, Stein finished eighth grade in a public school, and then spent the remainder of his years at Lutheran schools. Stein started high school at Concordia College. After his father's reassignment, Stein transferred to St. Paul's College in Concordia, Missouri. Stein spent four years at St. Paul's, where he completed his junior and senior years of high school and then took two years of college at the junior college level at St. Paul's. After graduation, Stein spent two years of training at Concordia Senior College in Fort Wayne, Indiana, and graduated in 1962. Stein majored in history and focused on pre-theological studies. Stein then attended Concordia Seminary in St. Louis, Missouri. Right before completing his vicarage during his third year at the Seminary, he married Devania Dockery, of Evansville, Indiana, in June 1964. After their wedding, Stein was assigned to the University of Michigan where he and his wife spent their first year of marriage in Ann Arbor. Following that year, Stein returned for his last year at the Seminary in fall 1965.

Upon completion of his schooling, Stein began teaching part time at a seminary called Lutheran High School North, situated in the northern part of St. Louis. At the seminary, Stein realized that he was not interested in becoming a parish clergyman and started applying to graduate schools, including Columbia, Harvard, and Yale, and was accepted into all three. At Yale University, Stein studied American religious history and studied under the tutelage of Sydney Ahlstrom, who served as history faculty member in the American History program, director of the American Studies Program, a member of the faculty at the divinity school, and a professor in a Department of Religious Studies. In Stein's second year, Alstrom suggested that Stein write a dissertation proposal to edit a critical edition of the "Notes on the Apocalypse." Stein's proposal was accepted by the committee, and Stein began his in-depth study on Jonathan Edwards. In 1970, Stein received his doctorate degree and joined the Department of Religious Studies at Indiana University.

Stein served as Chancellors' Professor of Religious Studies and Adjunct Professor of History at Indiana University. Professor Stein, a specialist in eighteenth-century religious thought, was the editor of two volumes of The Works of Jonathan Edwards published by Yale University Press - Apocalyptic Writings (1977) and Notes on Scripture (1998), and competed work on a third, an edition of Edwards's "Blank Bible," a comprehensive scriptural commentary. He published extensively in the subfield of American sectarian studies, including Letters from a Young Shaker: William S. Byrd at Pleasant Hill (Kentucky, 1985) and Alternative American Religious (Oxford, 2000). His volume, The Shaker Experience in America: A History of the United Society of Believers (Yale, 1992), which received the Schaff prize from the American Society of Church History, is widely regarded as the definitive study of the Shakers. He was editor of Apocalypticism in the Modern Period and the Contemporary Age, volume 3 in The Encyclopedia of Apocalypticism (Continuum, 1998). Professor Stein served as President of the American Society of Church History in 1994. He has been awarded fellowships from the National Endowment for the Humanities, and received IU's College of Arts and Sciences Distinguished Faculty Award and the Tracy M. Sonneborn Award for Excellence in Teaching and Research. After thirty-five years at Indiana University, Stein retired in 2005.