The colony is founded in early spring, soon after the queens (mated females) emerge from hibernation. As the colony matures, males and the next year's queens are produced. These queens mate with males and are the only members of the colony to survive through winter. In late summer or fall, the founding queen, workers (unmated females), and males all die. The newly mated queens hibernate, typically in piles of wood, in vegetation, or in holes. The following spring they emerge and begin the cycle anew. A similar life cycle is found in bumble bees.

Most social wasps of the family Vespidae make nests from paper; although some tropical wasp species, such as Liostenogaster flavolineata, use mud. A small group of eusocial crabronid wasps, of the genus Microstigmus (the only wasps outside the family Vespidae), also construct nests out of chewed plant fibers, though the nest consistency is quite different from those of true paper wasps, due to the absence of wood fibers, and the use of silk to bind the fibers.

Unlike yellowjackets and hornets, which can be very defensive, paper wasps will generally only attack if the nest is threatened. Since their territoriality can lead to attacks on persons, and because their stings are quite painful and can produce a potentially fatal reaction in some individuals, nests in human-inhabited areas may present an unacceptable hazard.

Most wasps are beneficial in their natural habitat, and are critically important in natural biocontrol. Paper wasps feed on nectar, and other insects, including caterpillars, flies and beetle larvae, and they are often considered to be beneficial by gardeners. In some parts of Europe, hornets are a threatened species and are protected by law. In some areas however they are considered a pest - for example introduced species of wasp in New Zealand are a concern for conservation as they compete with native fauna.

Paper wasps form small colonies, and make paper nests under tree branches and the eaves of houses. The nests are shaped like inverted cones, and consist of a cluster of hexagonal cells made from wood fibre mixed with saliva. The wasp larvae are maggot-like and develop inside the papery cells of the nest. The adult wasps catch caterpillars to feed the larvae, but the adults themselves feed on nectar. Recently, the introduced Asian Paper Wasp (Polistes chinensis) has been reported from several inner city suburbs of Sydney. This closely related species is larger than the native Polistes and tends to have more distinctive yellow and brown bands.

 These wasps can deliver painful stings, but are not as aggressive as European Wasps. They normally only attack humans if their nest is disturbed. If stings are multiple, a more severe systemic reaction may occur. In some individuals, wasp, bee and ant stings can cause an allergic reaction (anaphylaxis), but this is relatively uncommon. Effective treatment is available, which involves known bee/ant/wasp sting allergy sufferers carrying a special kit when outdoors. Immunotherapy or desensitisation therapy is also available, and can reduce the severity of the allergy. Seven deaths over a twenty-year period attributed to wasp stings have been recorded in Australia, mainly among known allergy sufferers who were not carrying their preventative medicine with them.