Karaosmanoğlu was born in Cairo in 1889. He was the son of Abdülkadir Bey, a member of the Karaosmanoğulları family which started to gain a reputation in the 17th century around the Manisa region. His mother was İkbal Hanım, a woman in İsmail Paşa's palace community. Until the age of six, he was raised in Cairo, after which his family moved to their homeland, Manisa. He completed his primary education in Manisa, and in 1903, they moved to İzmir.
His novelYaban (Stranger, 1932) depicts the bitter experiences of a Turkish intellectual, Ahmet Celal, in the countryside after losing his arm in the Battle of Gallipoli. Though categorized as naturalist, the novel has a romantic, anti-pastoral quality.
His novel Panorama analyzes the political, social, and economical changes during the transition from the Ottoman Empire period to the Republic of Turkey period. It is considered to be a "generation novel" as the story is based on the lives of several generations of the same family during this transitional period.
He was one of the theorists of the Kadro movement.