Hughes was born on 25 September 1862 at 7 Moreton Place, Pimlico, London, the son of william Hughes and the former Jane Morris. His parents were both Welsh. His father, who worked as a carpenter and joiner at the Palace of Westminster, was from North Wales and was a fluent Welsh speaker. His mother, a domestic servant, was from the small village of Llansantffraid-ym-Mechain (near the English border), and spoke only English. Hughes was an only child; at the time of their marriage, in June 1861, his parents were both 37 years old.

At the age of 22, finding his prospects in London dim, Hughes decided to emigrate to Australia. Taking advantage of an assisted-passage scheme offered by the Colony of Queensland, he arrived in Brisbane on 8 December 1884 after a two-month journey. On arrival, he gave his year of birth as 1864, a deception that would not be uncovered until after his death. Hughes attempted to find work with the Education Department, but was either not offered a position or found the terms of employment to be unsuitable. He spent the next two years as an itinerant labourer, working various odd jobs. In his memoirs, Hughes claimed to have worked variously as a fruitpicker, tally clerk, navvy, blacksmith's striker, station hand, drover, and saddler’s assistant, and to have travelled (mostly on foot) as far north as Rockhampton, as far west as Adavale, and as far south as Orange, New South Wales. He also claimed to served briefly in both the Queensland Defence Force and the Queensland Maritime Defence Force. Hughes' accounts are by their nature unverifiable, and his biographers have cast doubt on their veracity – Fitzhardinge states that they were embellished at best and at worst "a world of pure fantasy".

Hughes moved to Sydney in about mid-1886, working his way there as a deckhand and galley cook aboard SS Maranoa. He found occasional work as a line cook, but at one point supposedly had to resort to living in a cave on The Domain for a few days. Hughes eventually found a steady job at a forge, making hinges for colonial ovens. Around the same time, he entered into a common-law marriage with Elizabeth Cutts, his landlady's daughter; they would have six children together. In 1890, Hughes moved to Balmain. The following year, with his wife's financial assistance, he was able to open a small shop selling general merchandise. The income from the shop was not enough to live on, so he also worked part-time as a locksmith and umbrella salesman, and his wife as a washerwoman. One of Hughes' acquaintances in Balmain was william Wilks, another Future MP, while one of the customers at his shop was Frederick Jordan, a Future Chief Justice of New South Wales.

In Balmain, Hughes became a Georgist, a street-corner speaker, President of the Balmain Single Tax League, and joined the Socialist League. He was an organiser with the Australian Workers' Union and may have already joined the newly formed Labor Party. In 1894, Hughes spent eight months in central New South Wales organising for the Amalgamated Shearers' Union and then won the Legislative Assembly seat of Sydney-Lang by 105 votes.

While in Parliament he became secretary of the Wharf Labourer's Union. In 1900 he founded and became first national President of the Waterside Workers' Union. During this period Hughes studied law, and was admitted as a barrister in 1903. Unlike most Labor men, he was a strong supporter of Federation and Georgism.

In 1901 Hughes was elected to the first federal Parliament as Labor MP for West Sydney. He opposed the Barton government's proposals for a small professional army and instead advocated compulsory universal training. In 1903, he was admitted to the bar after several years part-time study. He became a King's Counsel (KC) in 1909. (The title changed to Queen's Council (QC) on the accession of Queen Elizabeth II in 1952.)

The government replaced the first-past-the-post electoral system applying to both houses of the Federal Parliament under the Commonwealth Electoral Act 1903 with a preferential system for the House of Representatives in 1918. That preferential system has essentially applied ever since. A multiple majority-preferential system was introduced at the 1919 federal election for the Senate, and that remained in force until it was changed to a quota-preferential system of proportional representation in 1948. Those changes were considered to be a response to the emergence of the Country Party, so that the non-Labor vote would not be split, as it would have been under the previous first-past-the-post system.

Soon after arriving in Sydney, Hughes entered into a common-law marriage with Elizabeth Cutts, the daughter of one of his landladies. Their relationship was never formally registered or solemnised, but they lived as husband and wife and had six children together – william (b. 1891; died in infancy), Ethel (b. 1892), Lily (b. 1893), Dolly (b. 1895), Ernest (b. 1897), and Charles (b. 1898). They also raised Arthur (b. 1885), Elizabeth's son from a previous relationship, who took Hughes as his surname. Their marriage was solid, though sometimes strained by Hughes' devotion to his work and frequent absences from home. Elizabeth had little interest in politics, and was sometimes ill at ease in the social situations that obtained as her husband’s career progressed. She died of heart failure on 1 September 1906, aged 42, after a long period of ill health.

His abrasive manner (his chronic dyspepsia was thought to contribute to his volatile temperament) made his colleagues reluctant to have him as Leader. His on-going feud with King O'Malley, a fellow Labor minister, was a prominent Example of his combative style. Hughes was also the club patron for the Glebe Rugby League team in the debut year of Rugby League in Australia, in 1908. Hughes was one of a number of prominent Labor politicians who were aligned with the Rugby League movement in Sydney in 1908. Rugby League was borne out of a player movement against the Metropolitan Rugby Union who refused to compensate players for downtime from their jobs due to injuries sustained playing Rugby Union. Labor politicians aligned themselves with the new code as it was seen as a strong social standpoint, politically, and it was an enthusiastic professional game, which made the politicians themselves appear in a similar vein, in their opinions anyway.

Conscription had been in place since the 1910 Defence Act, but only in the defence of the nation. Hughes was seeking via a referendum to change the wording in the act to include "overseas". A referendum was not necessary but Hughes felt that in light of the seriousness of the situation, a vote of "Yes" from the people would give him a mandate to bypass the Senate. The Lloyd George Government of Britain did favour Hughes but only came to power in 1916, several months after the first referendum. The predecessor Asquith government greatly disliked Hughes considering him to be "a guest, rather than the representative of Australia".

After marrying his wife Mary in 1911, the couple went on a long drive, because he did not have time for a honeymoon. Their car crashed where the Sydney–Melbourne road crosses the Sydney–Melbourne railway north of Albury, New South Wales, leading to the level crossing there being named after him; it was later replaced by the Billy Hughes Bridge.

In 1913, at the foundation ceremony of Canberra as the capital of Australia, Hughes gave a speech proclaiming that the country was obtained via the elimination of the indigenous population. "We were destined to have our own way from the beginning..[and]..killed everybody else to get it," Hughes said, adding that "the first historic event in the history of the Commonwealth we are engaged in today [is] without the slightest trace of that race we have banished from the face of the earth." But he warned that "we must not be too proud lest we should, too, in time disappear."

Like Jan Smuts of South Africa, Hughes was concerned by the rise of Japan. Within months of the declaration of the European War in 1914, Japan, Australia and New Zealand had seized all German territorial possessions in the Pacific. Though Japan had occupied German possessions with the blessing of the British, Hughes felt alarm at this turn of events. In 1919 at the Peace Conference the British Dominions of New Zealand, South Africa and Australia argued their case to keep their occupied German possessions of German Samoa, German South West Africa, and German New Guinea respectively; these territories were given as "Class C Mandates" to the respective Dominions. In a same-same deal Japan obtained control over its occupied German possessions north of the equator.

The only child from Hughes' second marriage was Helen Myfanwy Hughes, who was born in 1915 (a few months before he became prime minister). He doted upon her, calling her the "joy and light of my life", and was devastated by her death in childbirth in 1937, aged 21. Her son survived and was adopted by a friend of the family, with his grandfather contributing towards his upkeep. Because she was unmarried at the time, the circumstances of Helen's death were kept hidden and did not become generally known until 2004, when the ABC screened a program presented by the actor Martin Vaughan. Vaughan had played Billy Hughes in the 1975 film Billy and Percy, and his continuing interest in him led to the unearthing of Helen's fate.

In early 1916, Hughes established the Advisory Council on Science and Industry, the first national body for scientific research and the first iteration of what is now the CSIRO. The council had no basis in legislation, and was intended only as a temporary body to be replaced with "Bureau of Science and Industry" as soon as possible. However, due to wartime stresses and other considerations the council endured until 1920, at which point an act of parliament was passed transforming it into a new government agency, the Institute of Science and Industry. According to Fitzhardinge: "The whole affair was highly typical of Hughes's methods. An idea coming from outside happened to chime with his preoccupation of the moment. He seized it, put his own stamp on it, and pushed it through to the point of realization. Then, having established the machinery, he expected it to run itself while he turned his full energies elsewhere, and tended to be evasive or testy if he was called back to it. Yet his interest was genuine, and without his enthusiasm and drive the Commonwealth intervention would either not have come at all or would have been far slower".

At the May 1917 federal election Hughes and the Nationalists won a huge electoral victory. At this election Hughes gave up his working-class Sydney seat and was elected for Bendigo, Victoria, becoming the first of only a handful of people who have represented more than one state or territory in the Parliament. Hughes had promised to resign if his Government did not win the power to conscript. Queensland Premier T. J. Ryan was a key opponent to conscription, and violence almost broke out when Hughes ordered a raid on the Government Printing Office in Brisbane, with the aim of confiscating copies of Hansard that covered debates in the Queensland Parliament where anti-conscription sentiments had been aired. A second plebiscite on conscription was held in December 1917, but was again defeated, this time by a wider margin. Hughes, after receiving a vote of no confidence in his leadership by his party, resigned as Prime Minister. However, there were no credible alternative candidates. For this reason, Munro-Ferguson used his reserve power to immediately re-commission Hughes, thus allowing him to remain as Prime Minister while keeping his promise to resign.

Hughes demanded that Australia have independent representation within the newly-formed League of Nations. Despite the rejection of his conscription policy, Hughes retained popularity with Australian voters, and in the Australian federal election of December 1919 his government was comfortably re-elected. At the Treaty negotiations, Hughes was the most prominent opponent of the inclusion of Japan's Racial Equality Proposal, which as a result of lobbying by him and others was not included in the final Treaty. His position on this issue reflected the general mindset of "racial categories" during this time. Japan was notably offended by Hughes's position on the issue.

After 1920 Hughes's political position declined. Many of the more conservative elements of his own party never trusted him because they thought he was still a socialist at heart, citing his interest in retaining government ownership of the Commonwealth Shipping Line and the Australian Wireless Company. However, they continued to support him for some time after the war, if only to keep Labor out of power.

At the 1922 federal election, Hughes gave up Bendigo and transferred to the upper-class seat of North Sydney, thus giving up one of the last symbolic links to his working-class roots. The Nationalists lost their outright majority at the election. The Country Party, despite its opposition to Hughes's farm policy, was the Nationalists' only realistic coalition partner. However, party leader Earle Page let it be known that he and his party would not serve under Hughes. Under pressure from his party's right wing, Hughes resigned in February 1923 and was succeeded by his Treasurer, Stanley Bruce. Hughes was the longest-serving Prime Minister, until his term was surpassed by Robert Menzies (in 1957).

Hughes was furious at being ousted by his own party and nursed his grievance on the back-benches until 1929, when he led a group of back-bench rebels who crossed the floor of the Parliament to bring down the Bruce government. Hughes was expelled from the Nationalist Party, and formed his own party, the Australian Party. After the Nationalists were heavily defeated in the ensuing election, Hughes initially supported the Labor government of James Scullin. He had a falling-out with Scullin over financial matters, however. In 1931 he buried the hatchet with his former colleagues and joined the Nationalists and several right-wing Labor dissidents under Joseph Lyons in forming the United Australia Party (UAP), under Lyons' leadership. He voted with the rest of the UAP to bring the Scullin government down.

The UAP won a sweeping victory at the 1931 election. Lyons sent Hughes to represent Australia at the 1932 League of Nations Assembly in Geneva and in 1934 Hughes became Minister for Health and Repatriation in the Lyons government. Later Lyons appointed him Minister for External Affairs, but Hughes was forced to resign in 1935 after his book Australia and the War Today exposed a lack of preparation in Australia for what Hughes correctly supposed to be a coming war. Soon after, the Lyons government tripled the defence budget.

Hughes was brought back to Australia by Lyons as Minister for External Affairs in 1937. By the time of Lyons' death in 1939, Hughes was also serving as Attorney-General and Minister for Industry. He also served as Minister for the Navy, Minister for Industry and Attorney-General at various times under Lyons' successor, Robert Menzies.

Defence issues became increasingly dominant in public affairs with the rise of Fascism in Europe and militant Japan in Asia. From 1938, Prime Minister Joseph Lyons had Hughes head a recruitment drive for the Australian Defence Force. On 7 April 1939, Lyons died in office. The United Australia Party selected Robert Menzies as his successor to lead a minority government on the eve of World War Two. Australia entered the Second World War on 3 September 1939 and a special War Cabinet was created after war was declared – initially composed of Prime Minister Menzies and five senior ministers including Hughes.

Labor opposition leader John Curtin declined to join and Menzies lost his majority at the 1940 Election. With the Allies suffering a series of defeats and the threat of war growing in the Pacific, the Menzies Government (1939-1941) relied on two independents, Arthur Coles and Alex Wilson for its parliamentary majority.

Unable to convince Curtin to join in a War Cabinet and facing growing pressure within his own party, Menzies resigned as Prime Minister and leader of the UAP on 29 August 1941. Although the UAP had been in government for a decade, it was so bereft of leadership that it was forced to elect Hughes as its leader. In the normal course of events, this should have made Hughes Prime Minister for the second time. However, Hughes was only a month shy of 79 and had been in declining health for some time. For this reason, he was deemed too old and frail to be a wartime Prime Minister, and gave up the leadership of the UAP-Country Coalition—and the Prime Ministership—to Country Party leader Arthur Fadden. He remained as the #2-man in the Fadden government, serving as Attorney-General and Minister for the Navy. A month later, Coles and Wilson joined with the Labor opposition to defeat the budget and bring down the government. The independents, under prodding from Governor-General Lord Gowrie, then threw their support to Opposition Leader John Curtin, who was sworn in as Prime Minister on 7 October 1941. Eight weeks later, Japan attacked Pearl Harbor.

Hughes led the UAP into the 1943 election largely by refusing to hold any party meetings and by agreeing to let Fadden lead the Opposition as a whole. The Coalition was severely defeated, winning only 19 seats. Hughes himself was nearly defeated in North Sydney on a swing of over 14 percent, seeing his majority dwindle from a comfortably safe 67 percent to a marginal 53 percent. After the election, Hughes—who had widely been reckoned as a stopgap leader—yielded the leadership of the UAP back to Menzies. In February 1944 the UAP withdrew its members from the Advisory War Council in protest against the Curtin government. Hughes rejoined the council, and was expelled from the UAP.

In 1944 Menzies formed a new party, the Liberal Party, and Hughes became a member. In 1949, much of the northern portion of North Sydney was redistributed to the new seat of Bradfield; Hughes transferred there and won easily. He remained a member of Parliament until his death in October 1952, sparking a Bradfield by-election. He had been a member of the House of Representatives for 51 years and seven months. Including his Service in the New South Wales colonial Parliament before that, Hughes had spent a total of 58 years as an MP, and had never lost an election. His period of Service remains a record in Australia. He was the last member of the original Australian Parliament elected in 1901 still serving in Parliament when he died. Hughes was the penultimate member of the First Parliament to die; King O'Malley outlived him by fourteen months. Hughes was also the last surviving member of the Watson Cabinet, as well as the first and third Cabinets of Andrew Fisher.

Hughes died on 28 October 1952, aged 90, at his home in Lindfield. His state funeral was held at St. Andrew's Cathedral, Sydney and was one of the largest Australia has seen: some 450,000 spectators lined the streets. He was later buried at Macquarie Park Cemetery and Crematorium with his daughter Helen; his widow Dame Mary joined them upon her death in 1958.

In 1972, he was honoured on a postage stamp bearing his portrait issued by Australia Post.

At the 50th Jubilee dinner of the Commonwealth Parliament, a speaker paid tribute to him as a man "who sat in every Parliament since Federation – and every party too". Arthur Fadden interjected: "Not the Country Party!" "No," said Hughes, still able to hear when he wanted, "I had to draw the line somewhere."

Hughes, a tiny, wiry man, with a raspy voice and an increasingly wizened face, was an unlikely national leader, but during the First World War he acquired a reputation as a war leader—the troops called him the "Little Digger"—that sustained him for the rest of his life. He is remembered for his outstanding political and diplomatic skills, for his many witty sayings, and for his irrepressible optimism and patriotism.

Hughes was honored with fifteen ‘Freedom of the City’ awards – more than any other Prime Minister of Australia. Among these include:

After finishing his initial apprenticeship, Hughes stayed on at St Stephen’s as a teaching assistant. He had no interest in teaching as a career though, and also declined Matthew Arnold’s offer to secure him a clerkship at Coutts. His relative financial security allowed him to pursue his own interests for the first time, which included bellringing, boating on the Thames, and travel (such as a two-day trip to Paris). He also joined a volunteer battalion of the Royal Fusiliers, which consisted mainly of artisans and white-collar workers. In later life, Hughes recalled London as “a place of romance, mystery and suggestion”.