In 1762, the family moved to North Carolina in what is now Iredell County. Including lands given to his children, william Stephenson (Stevenson after the American Revolution) had amassed 3,400 acres (1,400 ha) of land by the time of his death. One branch of the family, including Adlai Stevenson's father, then moved to Kentucky in 1813.

Adlai Ewing Stevenson was born in Christian County, Kentucky, on October 23, 1835, to John Turner and Eliza Ewing Stevenson, Wesleyans of Scots-Irish descent. The Stevenson family is first recorded (as the Stephensons) in Roxburghshire, Scotland, in the early 18th century. The family appears to have been of some wealth, as a private chapel in the Archdiocese of St Andrews bears their name. At some point, probably shortly after the Jacobite rising of 1715, the family migrated to County Antrim, Ireland, near Belfast. At least one Stephenson was a police officer. william Stephenson, the great-grandfather of Adlai, was a tailor who specialized in millinery. After William's father died in the 1730s, his family moved to Lancaster County, Province of Pennsylvania; william joined when his apprenticeship was completed in 1748.

Stevenson was born on the family farm in Christian County. He attended a public school in Blue Water, Kentucky. In 1850, when he was 14, frost killed the family's tobacco crop. Two years later, his father set free their few slaves and the family moved to Bloomington, Illinois, where his father then operated a sawmill. Stevenson attended Illinois Wesleyan University at Bloomington and ultimately graduated from Centre College, in Danville, Kentucky; at the latter he was a part of Phi Delta Theta. His father's death prompted Stevenson to return from Kentucky to Illinois to run the sawmill.

Stevenson studied law with Bloomington attorney Robert E. Williams. He was admitted to the bar in 1858, and commenced practice in Metamora. As a young Lawyer, Stevenson encountered such celebrated Illinois attorneys as Stephen A. Douglas and Abraham Lincoln, and he campaigned for Douglas in his 1858 Senate race against Lincoln. Stevenson's dislike of Lincoln might have been prompted by a contentious meeting between the two, at which Lincoln made several witty quips disparaging Stevenson. Stevenson also made speeches against the "Know-Nothing" movement, a nativist group opposed to immigrants and Catholics. That stand helped cement his support in Illinois' large German and Irish communities. In a predominantly Republican area, the Democratic Stevenson won friends through his storytelling and his warm and engaging personality.

Stevenson was appointed master in chancery (an aide in a court of equity), his first public office, which he held during the Civil War. In 1864 Stevenson was a presidential elector for the Democratic ticket; he was also elected district attorney.

In 1866, he married Letitia Green. They had three daughters, Mary, Julia and Letitia, and a son, Lewis Stevenson. Letitia helped establish the Daughters of the American Revolution as a way of healing the divisions between the North and South after the Civil War, and succeeded the wife of Benjamin Harrison as the DAR's second president-general.

In 1868, at the end of his term as district attorney, he entered law practice with his cousin, James S. Ewing, moving with his wife back to Bloomington, Illinois, and settling in a large house on Franklin Square. Stevenson & Ewing would become one of the state's most prominent law firms. Ewing would later become the U.S. ambassador to Belgium.

The Democratic Party nominated Stevenson for the United States Congress in 1874. Stevenson was well-liked by Republicans and levied influence in the local Masonic lodge. Stevenson also received the nomination of the Independent Reform Party, a state party that fought monopolies following the Panic of 1873. Stevenson campaigned against Republican incumbent John McNulta. He attacked McNulta's support for high tariffs and what became known as the Salary Grab Act, where congressmen increased their salaries by 50%. He spoke little of his own positions other than railroad regulation. McNulta attacked back, accusing Stevenson membership in the Knights of the Golden Circle. Thanks to the votes siphoned away from the Republican Base by the Independent Reform Party, Stevenson won the election with 52% of the vote, though he did not carry his hometown of Bloomington. He was elevated to the 44th United States Congress, the first under Democratic control since the Civil War.

In 1876, Stevenson was an unsuccessful candidate for reelection. The Republican presidential ticket, headed by Rutherford B. Hayes carried his district, and Stevenson was narrowly defeated, getting 49.6 percent of the vote. In 1878, he ran on both the Democratic and Greenback tickets and won, returning to a House from which one-third of his earlier colleagues had either voluntarily retired or been removed by the voters. In 1880, again a presidential election year, he once more lost narrowly, and he lost again in 1882 in his final race for Congress. He considered a run in 1884, but a redistricting made his district safely Republican.

In between legislative sessions, Stevenson increased his prominence in Bloomington. He rose to become grandmaster of his Masonic chapter and founded the Bloomington Daily Bulletin in 1881, a Democratic newspaper that sought to challenge the Republican Pantagraph. Stevenson directed the People's Bank and co-managed the McLean County Coal Company with his brothers. The company founded Stevensonville, a company town near the mine shafts. Employees were purportedly fired if they did not support Stevenson in an election year.

The Stevensons vacationed at lake resorts in Wisconsin during summers. There, Stevenson befriended william Freeman Vilas, a growing voice among Midwest Democrats and a friend of Grover Cleveland. Stevenson was a delegate to the 1884 Democratic National Convention, and after briefly supporting a local candidate, he threw his support behind Cleveland. Vilas and Stevenson personally informed Cleveland of the nomination. When Cleveland was elected that November, Vilas was named postmaster general. Although a different supporter was initially named assistant postmaster general, Stevenson received the position after the first choice fell ill.

The Populists had already nominated the ticket of Bryan and Charles A. Towne, a pro-silver Republican from Minnesota, with the tacit understanding that Towne would step aside if the Democrats nominated someone else. Bryan preferred his good friend Towne, but Democrats wanted one of their own, and the regular element of the party felt comfortable with Stevenson. Towne withdrew and campaigned for Bryan and Stevenson. As a result, Stevenson, who had run with Cleveland in 1892, now ran in 1900 with Cleveland's opponent Bryan. Twenty-five years senior to Bryan, Stevenson added age and experience to the ticket. Nevertheless, their effort failed badly against the Republican ticket of McKinley and Roosevelt. (Stevenson's role in the race is perhaps more distinguished by his being the first Vice President to win nomination for that office with a different running mate, after having completed his first term. As of 2017, Republican Charles W. Fairbanks's failure to win a second VP term in 1916 is the only Example since.)

A habitual cigar-smoker, Cleveland developed cancer of the mouth that required immediate surgery in the summer of 1893. The President insisted that the surgery be kept secret to avoid another panic on Wall Street. While on a yacht in New York harbor that summer, Cleveland had his entire upper jaw removed and replaced with an artificial device, an operation that left no outward scar. The cancer surgery remained secret for another quarter century. Cleveland's aides explained that he had merely had dental work. His vice President little realized how close he came to the presidency that summer.

After the 1896 election, Bryan remained the titular leader of the Democrats and frontrunner for the nomination in 1900. Much of the newspaper speculation about who would run as the party's vice-presidential candidate centered on Indiana Senator Benjamin Shively. When reporter Arthur Wallace Dunn interviewed Shively at the convention, the senator said he "did not want the glory of a defeat as a vice presidential candidate." Disappointed, Dunn said that he still had to file a story on the vice-presidential nomination, and then added: "I believe I'll write a piece about old Uncle Adlai." Shively responded

By May 1899, the North American Trust Company had Directors such as John G. Carlisle, Adlai E. Stevenson and Wager Swayne.

In 1900, he ran for Vice President with william Jennings Bryan. In doing so, he became the fourth Vice President to run for that post with two different presidential candidates (after George Clinton, John C. Calhoun and Thomas A. Hendricks). Stevenson was the grandfather of Adlai Stevenson II, a Governor of Illinois and the unsuccessful Democratic presidential candidate in both 1952 and 1956.

Stevenson's son, Lewis G. Stevenson, was Illinois secretary of state (1914–1917). Stevenson's grandson Adlai Ewing Stevenson II was the Democratic candidate for President of the United States in 1952 and 1956 and Governor of Illinois. His great-grandson, Adlai Ewing Stevenson III, was a U.S. senator from Illinois from 1970 to 1981 and an unsuccessful candidate for Governor of Illinois in 1982 and 1986.

In 1962, Stevenson's alma mater, Centre College, named a newly-built residence hall "Stevenson House" in his honor. They had previously awarded him an honorary degree in 1893.