Kerr was born William Henry Kerr in Cape Town, South Africa, on 10 June 1922 to an Australian performing arts family, growing up in Wagga Wagga, New South Wales, Australia. His career in show Business began when he was very young. Wilton, his son, recalled: "His mum used him instead of using a prop, a baby prop, she actually used her son, her newborn son, so he was literally kind of born to do it."

Kerr began to work in radio for ABC in 1932, and continued performing child parts for about 8 years. His first screen appearance was in Harmony Row (1933), where he gives a feisty performance as a Juvenile delinquent alongside the great Australian vaudeville Comedian George Wallace. Kerr's first dramatic role on screen was a high-profile one in the Cinesound film The Silence of Dean Maitland (1934), where he displays striking presence as a blind child. Kerr is one of the most important child performers in early Australian film. He saw Service in the Australian army during the Second World War, and performed in theatrical shows at home and abroad and toured with his friend, the actor Peter Finch.

After the war, Kerr moved to Britain in 1947. During the next few years he was regularly featured in the BBC radio series Variety Bandbox, part of the BBC Light Program. Retaining his accent, an unusual choice for performers moving to Britain at this time, he was billed as "the boy from Wagga-Wagga." A spokesman for the Australian town's museum said that this "struck an instant chord with the post-war British audience, who thought of 'Wagga Wagga' as a comically surreal, end of the earth, magical place somewhere left of Narnia." Harry Secombe described Kerr as having a "very laconic act" on the show, beginning his spots with the catchphrase "I'm only here for four minutes."

From 1954 to 1959, he had a regular role as an Australian lodger in the BBC radio comedy series Hancock's Half Hour. The series, with Comedian Tony Hancock as the eponymous lead and also featuring Sid James, ran for six series. Initially sharper than Hancock's characterisation, Kerr's portrayal eventually developed into a more dim-witted character who became the butt of Hancock's jokes. Unlike James, Kerr did not feature in the television version of the Hancock series. Kerr also starred in the highly entertaining Sunday afternoon radio drama series "The Flying Doctor" in the 1950s, regularly flying in and out of the fictitious Wollamoloo base as he and his "doctor" colleague brought reprobates to justice in the outback. Later, after Hancock had ended his professional partnership with Sid James, Kerr briefly resumed working with him in the first series of the television comedy Citizen James (1960). Kerr's other television appearances in Britain include a Doctor Who serial called The Enemy of the World (1968), with Patrick Troughton, and a long-running part in the early 1960s BBC-TV soap, Compact.

Kerr had much theatrical success in Britain, playing the Devil disguised as Mr Applegate in the first West End production of Damn Yankees, directed by Bob Fosse and first performed in March 1957. He appeared in a touring production of the play The Teahouse of the August Moon in 1956. He also worked with Spike Milligan and appeared in Milligan and John Antrobus's stage play The Bed-Sitting Room, which opened at the Mermaid Theatre on 31 January 1963. A subsequent production opened on 3 May 1967 at the Saville Theatre, and "a cast containing an unusually high proportion of Australian actors including Bill Kerr and David Nettheim." In the 1969 London production of Play It Again, Sam at the Globe Theatre, Kerr played Humphrey Bogart.

In 1972 he co-starred with Anthony Newley in the Newley/Bricusse musical, The Good Old Bad Old Days, which enjoyed a run lasting 309 performances. Later he had a role (with Julia McKenzie and Una Stubbs) in the musical play Cole, dedicated to the work of Cole Porter and first staged at the Mermaid Theatre, London in July 1974. Kerr took the part of Bluey Notts, described as "an Australian bookie's clerk, a crude racialist", in The Melting Pot (1975). This was a sitcom written by Spike Milligan and Neil Shand, which was cancelled by the BBC after just one episode had been broadcast. He also appeared in several British films, such as The Dam Busters (1955) and The Wrong Arm of the Law (1963).

Kerr also appeared in Glenview High (1978–79) and the television comedy series Minty (1998) and played the part of Douglas Kennedy in the soap opera The Young Doctors (1980). He was seen as Dave Welles in the Australian mini-series Return To Eden (1983) where he helped Stephanie Harper after she was attacked by a crocodile. He reprised his role of Dave Welles in the 1985 series of Return To Eden by giving Stephanie a deed to a worthless section of land in the Northern Territory.

In 1979, Kerr returned to Australia and settled in Perth, Western Australia. Now concentrating on character roles, he played serious roles in Australian films, including Peter Weir's films Gallipoli (1981) and The Year of Living Dangerously (1982). In 1982 Kerr acted in the film The Pirate Movie.

He worked on the Australian stage during the 1980s, in musicals such as My Fair Lady, where he received excellent reviews as Alfred Doolittle. Kerr played real-life Australian military personalities on three occasions, appearing as bomber pilot Micky Martin in The Dam Busters (1955), as General John Monash in the TV mini-series Anzacs (1985) and as General Harry Chauvel in the film The Lighthorsemen (1986). In addition to his serious roles, he also continued to appear in comedies including the film The Coca-Cola Kid (1985) and Let's Get Skase (2001).

Kerr provided the narration for the documentaries No Survivor - The Mysterious Loss of HMAS Sydney (1995) for the Nine Network, Malice or Mutiny (2003) for the AB), and a series for Discovery, released in the USA as Animal X (originally Animal X Natural Mystery Unit).

On 26 January 2011, Kerr received the 2011 Walk of Honour in Wagga Wagga, which was unveiled on 17 May 2011. Kerr died in his family home in Perth, Western Australia, on 28 August 2014 at the age of 92. He was married three times.