Born in Tel Aviv, Stern attended Bar-Ilan University, where he received a BA in Economics and Land of Israel Studies. He also received a Master's degree in Business Administration from Tel Aviv University and Northwestern University. He was drafted into the IDF in 1974 and volunteered as a paratrooper in the Paratroopers Brigade. In 1976 he became an officer after completing Officer Candidate School, eventually becoming the commander of a reserve Paratroopers Brigade in 1991. In the 1990s Stern became involved in officer training, and succeeded Gil Regev as head of the Manpower Directorate (a name he changed to Human Resources) in July 2004.
As head of Human Resources, Stern oversaw a program to convert non-Jewish IDF troops to Judaism. He has also led the integration of hesder units, homogeneous units of Orthodox male soldiers combining yeshiva studies with military service, into mainstream units. While criticised by some religious Israelis that the action was meant only to prevent insubordination of religious troops during the Gaza pullout, Stern maintains that it is better for the troops.
On 14 October 2005, Stern and his family were assaulted in Jerusalem while praying at the Western Wall in protest of his leading role in expelling Jews from the Gaza Strip during the disengagement plan. In 2008 he is said to have "stormed the stage" to prevent teenage rock star Shira Gavrielov from performing at a military farewell party on the grounds that she had not served in the military.
Stern completed his tenure as the head of the Human Resources Directorate in July 2008 and retired from the IDF. He was replaced by Avi Zamir, who received the Aluf rank.
Prior to the 2013 Knesset elections he joined the new Hatnuah party, and was placed fourth on its list. He was elected to the Knesset after the party won six seats, but announced on 20 December 2014 that he had left the party.
In the buildup to the 2015 elections he joined Yesh Atid, and was placed twelfth on its list. With the party winning only 11 seats, he lost his seat. However, he re-entered the Knesset on 4 September 2015 after Shai Piron resigned his seat.