Lerner was raised in an Orthodox Jewish family in Northwest Washington D.C., the eldest of three children born to Mayer, a 1921 emigrant from Palestine, and Ethel, who emigrated from Lithuania. He attended Raymond Elementary School, McFarland Junior High, and graduated from Roosevelt High School in 1944. He then served with the U.S. Army as a typist during the latter part of World War II. He then went on to attend George Washington University via the G.I. Bill where he received first an Associate of Arts and then in 1949, he graduated with a L.L.B. from The George Washington University Law School. While in law school, he sold homes on the weekends which piqued his interest in real estate.

On June 17, 1951, he married Annette M. Lerner. They have three children: Mark D. Lerner (married to Judy Lenkin Lerner), Debra Lerner Cohen (married to Edward L. Cohen) and Marla Lerner Tanenbaum (married to Robert K. Tanenbaum). Ted Lerner has nine grandchildren and six great grandchildren.

In 1952, he borrowed $250 from his wife and founded the real estate company Lerner Enterprises in Rockville, Maryland. It operates primarily throughout the Washington, D.C. metropolis. Lerner Enterprises is the largest private real estate developer in the Washington, D.C. region.

The Annette M. and Theodore N. Lerner Family Foundation provides support to many organizations, including: Food and Friends; The Hebrew University of Jerusalem; Shady Grove Adventist Hospital; Hadley’s Park; the Weizmann Institute of Science; the Scleroderma Foundation of Greater Washington; YouthAids; Junior Achievement of the Greater Washington Area; the Charles E. Smith Jewish Day School; and the Jewish Community Center of Greater Washington, among many others. Ted and his wife Annette are founding members of the United States Holocaust Memorial Museum in Washington, D.C. The American Academy of Achievement awarded Ted Lerner the Golden Plate Award of Excellence in 1990.

Washington Nationals franchise (then known as the Montreal Expos) was formerly owned and operated by Major League Baseball from February 15, 2002, until the official transfer of ownership on July 24, 2006. The Lerner Family is the majority owner of the franchise, controlling over 90% of the shares. Lerner retired as managing principal owner in 2018, ceding the role to his son, Mark D. Lerner.