Born in Findlay, Ohio, Crouse was the son of Sarah (née Schumacher) and Hiram Powers Crouse, a newspaperman. He began his Broadway career in 1928 as an actor in the play Gentlemen of the Press, in which he played Bellflower. By 1931, however, he had turned his attention to writing, penning the book for the musical The Gang's All Here, collaborating with Frank McCoy, Morrie Ryskind and Oscar Hammerstein II. His first work with his long-time partner Howard Lindsay came in 1934, when the two men revised the P. G. Wodehouse/Guy Bolton book for the Cole Porter musical Anything Goes. They then went on to adapt Clarence Day's "Life With Father" which became one of the longest running Broadway plays.
Later, Lindsay and Crouse became Broadway producers, often acting in that capacity for their own work, and also owned and operated the Hudson Theatre on 44th Street in New York.