Rabbi Gedaliah Hayon was born in Constantinople, in the Ottoman Empire, where he studied under Rabbi Chaim Alfandari. A kabbalist and emissary of the communities of the Land of Israel, he was one of the leading sages of Jerusalem in the first half of the eighteenth century.

In 5493 (1733), the Jews of Hebron, then in severe distress, asked him to travel to Turkey on their behalf. In Constantinople a committee had been set up to support the Jewish community of Jerusalem; Rabbi Gedaliah persuaded it to act for Hebron as well, and a committee for Hebron was founded to help pay the community's debts to the Ottoman authorities. He was praised for refusing any payment for this mission, although emissaries customarily received a substantial fee.

On his return in 5497 (1737), he founded and headed a yeshiva of kabbalists in Jerusalem, first called Midrash Chassidim and later Beit El. From the outset it was devoted to the study of Kabbalah by the select scholars of Jerusalem, and its fame soon spread throughout the Jewish world. Students came from the diaspora to learn there, among them Rabbi Avraham Gershon of Kitov, brother-in-law and disciple of the Baal Shem Tov. The yeshiva still exists in the Old City of Jerusalem.

The Chida, who studied in his yeshiva, describes him with deep admiration, calling him "holy", a title reserved for those who lived lives of sanctity and separation, and presenting him as a man whose prayers were answered.

In 5510 (1750), at his request, his disciple the kabbalist Rabbi Shalom Sharabi, who had come from Yemen, was appointed head of the yeshiva. Rabbi Gedaliah Hayon passed away on 5 Av 5510 (August 7, 1750) and was buried in Jerusalem on the Mount of Olives, south of the Tomb of Zechariah, on the path to Silwan.