Director Martin Scorsese was born in New York City to Italian immigrant parents in 1942. He grew up in an observant Catholic family in Little Italy, and at a young age he wanted to be a priest. His dreams soon changed, however, and he attended New York University film school. After film school, Scorsese moved west to Hollywood. Roger Corman, a pulp movie director and producer, hired him to direct Boxcar Bertha in 1972. Scorsese's first collaboration with Robert De Niro, who plays Travis in Taxi Driver, was on Mean Streets (1974), a film about Catholic Italian-Americans in Little Italy that was rooted in Scorsese's own childhood experiences. The next film Scorsese directed was Alice Doesn't Live Here Anymore, for which Ellen Burstyn won a Best Actress Academy Award, the same year that Robert De Niro won Best Supporting Actor for his role in Francis Ford Coppola's The Godfather Part II. These Academy Awards helped Scorsese raise the funds to make Taxi Driver in 1976. The filmreceived huge critical acclaim, cementing Scorsese's reputation as a major director. In addition to Taxi Driver, Scorsese has directed over twenty-five films, including the documentary Italianamerican (1974), the highly controversial The Last Temptation of Christ (1988), and, more recently, the popular Goodfellas (1990) and Gangs of New York (2002).

Taxi Driver elevated Scorsese's status as a director, and it assured Paul Schrader's reputation as a major screenwriter. In the mid-1970s, Schrader was an up-and-coming screenwriter whose first screenplay, The Yakuza (1975), was considered a success even though the film had not performed well financially. Taxi Driver's success bolstered Schrader's career and ensured his place in the Hollywood community. Although some scenes in Taxi Driver were influenced by the actors, the film follows Schrader's screenplay closely, more so than Scorsese has followed his other films' screenplays. Many of Schrader's later screenplays deal, like Taxi Driver, with one man's loneliness and alienation, including American Gigolo (1990) and the more recent Bringing Out the Dead (1999), which is in many ways an update and homage to Taxi Driver. Like Scorsese, Schrader grew up in a religious household. He did not see a film until his late teens, so his influences are more literary than cinematic. While writing Taxi Driver, he was under the spell of existentialist novels such as Albert Camus's The Stranger and earlier portraits of loneliness such as Fyodor Dostoevsky's Notes from Underground.

Scorsese made Taxi Driver in the mid-1970s, a decade famous for its diverse and innovative films. The 1970s produced a group of directors, sometimes called the "film school brats," that included Steven Spielberg, Francis Ford Coppola, Martin Scorsese, George Lucas, and Brian de Palma. These men were young Americans who had studied European filmmakers at film school, and they were also the first generation of filmmakers to have grown up watching television. Their movies feature close attention to technical detail, while demonstrating an encyclopedic knowledge of film and television history. At the same time, their films were not just art house pictures but huge box office successes, funded by Hollywood.

The fall of the Hollywood studio system at the end of the 1950s, combined with the various political upheavals of the 1960s, including the sexual revolution, the anti-Vietnam movement, and the civil rights movement, made predicting the public's taste increasingly difficult. During the early 1970s the largest studios lost over $500 million. They knew their methods of attracting audiences, which included using big name stars, making high-budget musicals, and releasing films based on popular novels, had become outdated. Studios became open to giving money to young and unknown directors who could make more original and risky movies. Taxi Driver centers on a racist, sociopathic, and violent protagonist and features a twelve-year-old prostitute, but at the time of its release it was a popular, well-received film. The movie was critically acclaimed in the United States, received four Oscar nominations, and did even better financially in Europe.

Taxi Driver immortalizes New York City in the 1970s, a city vastly different from the New York we know today. The city's filth is exaggerated in the film partly because it is seen through Travis Bickle's skewed perspective, but during 1975, when the movie was filmed, New York was literally a filthy city. New York nearly filed for bankruptcy in 1974, so when the New York City trash collectors went on strike in the summer of 1975, causing the streets to fill with warm garbage, the city didn't have the funds to fix the problem. One of the promises Jimmy Carter made when campaigning for the presidency, which he won in 1976, was that he would make sure New York City wouldn't have to file for bankruptcy. Taxi Driver presents a true-to-life portrait of what Manhattan once was. Times Square was filled with peep shows and prostitutes, and during the summer of 1975, when the film takes place, the country was in the middle of a presidential campaign where one of the main issues was moving beyond the Vietnam War, which had officially ended only in 1973. We can easily imagine an ex-marine in New York being disgusted by the filth, finding the politicians who are supposed to help him to be artificial, and feeling that he needs to approach the city as he would a special combat mission.