Born at Würzburg, of Jewish parentage, as Joël Jolson he was brought up strictly in the Jewish religion and was allowed to attend the gymnasium. As a result of its influence, he was at the age of seventeen converted to Christianity and baptized into the Lutheran Church at Erlangen in November 6, 1819. To this faith he clung with earnest devotion and persistence until his death. Having studied law at Würzburg, Heidelberg and Erlangen, Stahl, on taking the degree of doctor juris, established himself as Privatdozent in Munich, was appointed (1832) ordinary professor of law at Würzburg, and in 1840 received the chair of ecclesiastical law and polity at Berlin.
Here he immediately made his mark as an ecclesiastical lawyer, and was appointed a member of the first chamber of the general synod. Elected in 1850 a member of the short-lived Erfurt parliament, he bitterly opposed the idea of German federation. Stahl early fell under the influence of Schelling, and at the latter's insistence, began in 1827 his great work: Die Philosophie des Rechts nach geschichtlicher Ansicht (an historical view of the philosophy of law), in which he bases all law and political science upon Christian revelation, denies rationalistic doctrines, and, as a deduction from this principle, maintains that a state church must be strictly confessional.
This position he further elucidated in his Der christliche Staat und sein Verhältniss zum Deismus und Judenthum (The Christian State and its relation to Deism and Judaism; 1847). As Oberkirchenrath (synodal councillor) Stahl used all his influence to weaken the Prussian Union of churches (i.e. that compromise between the Calvinist and Lutheran doctrines which is the essence of the Evangelical Church in Prussia) and to strengthen the influence of the Lutheran Church (cf. Die Lutherische Kirche und die Union, 1859). Stahl advocated the formation of an episcopal constitution of the Lutherans, similar to Roman Catholics or Anglicans.
The Prussian minister von Bunsen attacked him, while King Frederick William IV supported Stahl in his ecclesiastical policy, and the Prussian Union would probably have been dissolved had not the regency of Prince William (afterwards William I, German Emperor) supervened in 1858. Stahl's influence fell under the new régime, and, while remaining a member of the Prussian House of Lords ("Herrenhaus"), he resigned his seat on the general synod. While taking a cure he unexpectedly died at Bad Brückenau.