Sydney Lough Thompson was born on 24 January 1877 at Oxford, Canterbury, New Zealand. He was one of six sons and three surviving daughters of Charles Abel Thompson, a shoemaker, and his wife, Sophia Matilda Lough. His father was a man of some enterprise, who had come to New Zealand as a young man and had established a general store in Oxford, before purchasing a sheep farm about four miles from town. Sydney attended school locally before beginning work on his father's farm as a boy of 13.
It was Petrus van der Velden's painting which first aroused Sydney Thompson's interest in art, and in 1895 he registered as a student at the Canterbury College School of Art in Christchurch and began taking lessons at van der Velden's studio. The painter was an important formative influence, encouraging Sydney's ambition to become an artist and developing his approach to painting. Thompson was counted one of the most promising students at the School of Art, and in 1896 gained three of the six free studentships. In 1899 he won a silver medal for still-life painting in the national competition of the British Department of Science and Art, the highest award gained by an art student in New Zealand.
Like many of his contemporaries, Sydney Thompson went to Europe to further his artistic education. With a large sum of money settled on him by his father, he left New Zealand for London in 1900. His art training began at the Heatherley School of Art, an appropriate choice for an artist with ambitions in portraiture and figure painting. However, he soon tired of its tedious routines and went briefly to the artists' colony at Staithes, Yorkshire, before leaving England in 1901 to study in Paris. He enrolled at the Académie Julian and took classes with Gabriel Ferrier and William-Adolphe Bouguereau. The Irish impressionist William John Leech was a fellow student. Thompson's travels included Italy, Scotland and Dublin, but it was the time spent at the artists' colony at Concarneau, Brittany, where he was based between 1902 and 1904, that made a lasting impression. His romantic involvement with the region, which was expressed in much of his subsequent painting, stemmed from this visit. In 1904 he exhibited at the Royal Academy of Arts in London, and at the Paris Salon of the Société des artistes français.
Sydney Thompson returned to New Zealand in 1905, and in 1906 was appointed an instructor at the Canterbury College School of Art, where he conducted classes in life drawing and painting until 1910. Together with fellow artists in Christchurch he formed a sketch club, whose members included Cecil Kelly, Raymond McIntyre, Alfred Walsh, William Menzies Gibb, Leonard Booth, Edwin Bartley, Kennaway Henderson and Charles Bickerton. The group met frequently at his studio in Cambridge Terrace. He served on the council of the Canterbury Society of Arts from 1905 to 1911, and exhibited regularly at the annual exhibitions of New Zealand art societies. He established a national reputation as a portraitist and a painter of Breton themes and Maori subjects.
He married Maude Ethel Coe at St Mary's Church, Irwell, Canterbury, on 28 March 1911, and shortly afterwards the couple left for Europe. Ethel Thompson was committed to supporting her husband's career as an artist, and independent enough to face the challenges which their life in France was to present. After a brief stay in England, where Sydney revisited Staithes, the couple arrived in Paris in autumn 1911. Sydney studied with Lucien Simon, as well as attending the Académie Colarossi and taking anatomy classes at the École nationale supérieure des beaux-arts. He made contact with expatriate New Zealand painters Frances Hodgkins, Owen Merton and Cora Wilding, and renewed his friendship with William Leech, as well as meeting members of the expatriate circle of the Irish post-impressionist Roderic O'Conor. After six months in Paris, during which time he became aware of the varied stylistic currents of post-impressionism, he left for Concarneau to work out his new artistic direction. Rejecting studio practice he painted out of doors at the harbour, concentrating on capturing colour and movement, and developing his technique by working systematically on increasingly large formats. The First World War disrupted his painting career, but the family remained in France. Three children – a son and two daughters – were born at Concarneau. Thompson's achievements in France included a successful exhibition in 1920 at the Galeries Georges Petit, Paris, and a 'mention honorable' at the Paris Salon in 1922.
The family returned to New Zealand in 1923, where a series of exhibitions established Thompson's position as New Zealand's most celebrated contemporary artist. His painting was popular with private collectors, and was acquired by art societies at Wellington and Christchurch, the Auckland Art Gallery and the Dunedin Public Art Gallery. Returning to France via Australia in 1925, he sold paintings to the National Art Gallery of New South Wales and the National Gallery of Victoria.
From 1925 to 1933 Thompson and his family divided their time between Concarneau, where they lived in summer and autumn, and Grasse, in Provence, where he and his wife purchased a house. Political and economic uncertainties in Europe forced his decision to return to New Zealand with his wife and daughters in 1933; his son remained in England. Apart from a brief trip to France in 1937–38, Thompson remained in New Zealand until 1948, painting mostly in the South Island, although he also worked at Mahurangi with Olivia Spencer Bower. He served as vice president of the New Zealand Society of Artists (1934), president of the Canterbury Society of Arts (1935–37), a member of the Committee of Management of the National Art Gallery, Wellington, and a member of the Christchurch City Council's Art Gallery Committee. He lectured and exhibited widely, and was made an OBE in 1937. From 1948 until his death at Concarneau on 8 June 1973, Thompson often travelled between France and New Zealand, working as a professional artist whose paintings had great public appeal. Ethel Thompson died in New Zealand in 1961. Sydney Thompson never lost his delight in painting. His last work was completed shortly before his 90th birthday.
Thompson's career spanned seven decades, and although he has been criticised for his conservatism, in the early 1920s he introduced New Zealanders to some of the advances which had been made in modern European art. His painterly brushwork, use of bright colour and tonal relationships presented new directions, and influenced a number of Canterbury artists. He was one of the first New Zealand-born painters to develop a professional career, but unlike Frances Hodgkins and Raymond McIntyre, the advanced artists of his generation, he did not cut his ties with New Zealand or attempt to define himself within the context of modern British art. Thompson shared the attitudes and aspirations of many New Zealanders of his time and background, and became one of the country's most popular painters. A retrospective exhibition in Christchurch in 1990 confirmed the continuing nostalgic appeal of his paintings. In France, regional recognition came in 1992 with a retrospective at the Musée de Pont-Aven, near Concarneau.