Born in 1583 into a masterless-samurai household in Kyoto. His childhood name was Kikumatsumaru, his personal name Nobukatsu, and his pen name Razan. He studied at Kennin-ji but refused to become a Zen monk, acquiring on his own a broad knowledge of Confucianism, history, and literature. In 1604 he entered the gate of the Zhu Xi scholar Fujiwara Seika, and on his recommendation became a tutor to Tokugawa Ieyasu in 1607. Thereafter he served four successive shoguns — Ieyasu, Hidetada, Iemitsu, and Ietsuna — taking in hand the drafting of shogunal documents, diplomatic papers, and ritual codes. In 1630 he received land at Shinobugaoka in Ueno from Shogun Iemitsu and opened the 'Kobunin.' In 1632 he re-erected a Sei-do hall donated by the Owari Tokugawa family (later the Yushima Seido), setting up the Senseiden and founding an institution of education with Zhu Xi learning at its core — the prototype of what became the Shoheizaka Gakumonjo, the official academy of the shogunate. He also took part in compiling histories such as 'Honcho Tsugan' and in drafting the Kinchu Narabini Kuge Shohatto, underpinning the civilian governance of the early shogunate. The Hayashi family, as hereditary holders of the title 'Daigaku no Kami,' led scholarship until the end of the Tokugawa period. In 1657, shocked by the loss of his residence in the Meireki Fire of Edo, he died at the age of 75.

Of broad learning and skilled in writing, he astonished Ieyasu with his powers of memory and speech. A rationalist who refused to become a Zen monk, he was valued by the shogunate as the one scholar able to present Confucianism as a systematic state philosophy. Politically conservative, he also showed an exclusivist tendency to expel doctrines other than Zhu Xi learning, laying the ground for the later monopoly of Zhu Xi thought. At the same time, in drafting documents and rituals he exhibited the precision of a man of affairs.

The Hayashi family led the shogunate's learning and culture over eleven generations, and the Shoheizaka Gakumonjo stood at the summit of Edo-period scholarship. Making Zhu Xi learning the official doctrine became the theoretical pillar legitimizing the four-class order of warrior, farmer, artisan, and merchant, and contributed to the stability of Edo society. The tradition of Confucian and Sinological scholarship was carried on into the modern academic system of Meiji in the form of, for instance, the Faculty of Letters at Tokyo University. On the other hand, the exclusion of other schools by the monopoly of Zhu Xi also produced, as a counter-reaction, the development of unofficial learning in Yomeigaku, kogaku, kokugaku, and Dutch studies, leaving a complex legacy in the history of Japanese thought.