Fred Thomas Larson was born on April 19, 1868 on Taylor Street in Chicago, Illinois. Larson was essentially self-taught and began his artistic career when he was a young man as an apprentice lithographer. He was a painter in watercolor and oils, and learned to make woodcuts. Fred was one of the founding members of the Palette and Chisel Academy of Fine Arts in Chicago in 1895.  These founders advocated painting out of doors away from studios. They met in Lorado Taft's studio in the old Athenaeum Building on Van Buren Street in Chicago. Carl Mauch was the first president, and he along with Rudolphe Ingerle, Charles Mulligan and Fred Larson were the organizers. Larson was treasurer of the organization for twenty-three years.

Larson helped to arrange the academy's comic "operas." Carmen, for example, was advertised by the cast as, "The greatest of all grandstand operas in three acts and six spasms, a Carmen with improvised rag time band music". Fred pledged his home as collateral to help secure the mortgage on the Palette and Chisel's Dearborn Street property. He allegedly taught wood block printing to a fellow Palette and Chisel member, the young Gustave Baumann.

He married Norwegian-born Hanna Hanson on March 24, 1894. They had two daughters, Martha, born May 28, 1896, and Florence, born March 21, 1899, and they also raised Hanna's sister's son, Harry Hanson. They lived for many years at 2935 North Whipple Street in Chicago, near Logan Square. After Hanna's death in 1925, Fred went on for a visit to New Orleans, where he did many of his most memorable images (Enchanted Entrance and St. Louis Cathedral, among others). He wrote about this tour in his 1929 book Sketching in New Orleans and along the Mississippi. Fred had a stroke in 1937 that incapacitated him for several years before his death.

Fred T. Larson died in Chicago on November 2, 1944. Hanna and Fred are buried in Mount Olive Cemetery in Chicago.