Balázs was the son of Simon Bauer and Eugénia Léwy, adopting his nom de plume in newspaper articles written before his 1902 move to Budapest, where he studied Hungarian and German at the Eötvös Collegium.

Balázs was a moving force in the Sonntagskreis or Sunday Circle, the intellectual discussion group which he founded in the autumn of 1915 together with Lajos Fülep, Arnold Hauser, György Lukács and Károly (Karl) Mannheim.

[3] He is perhaps best remembered as the librettist of Bluebeard's Castle which he originally wrote for his roommate Zoltán Kodály, who in turn introduced him to the eventual composer of the opera, Béla Bartók.

A popular consultant, he wrote the screenplay for G. W. Pabst's film of Die Dreigroschenoper (1931), which became the object of a scandal and lawsuit by Brecht (who admitted to not reading the script) during production.

Later, he co-wrote (with Carl Mayer) and helped Leni Riefenstahl direct the film Das blaue Licht (1932).