Educated at Hove House and Clapham Grammar School, Scott went up to Corpus Christi College, Oxford. He took a first in Greats in the autumn of 1869, then in 1870 went to Edinburgh to train on The Scotsman. While at Oxford, his cousin John Taylor, who ran the London office of the Manchester Guardian, decided that the paper needed an Editor based in Manchester and offered Scott the post. Scott already enjoyed a familial connection with the paper; its founder, John Edward Taylor, was his uncle, and at the time of his birth Scott's father, Russell Scott, was the paper's owner, though he later sold it back to Taylor's sons under the terms of Taylor's will. Accepting the offer, Scott joined the paper as their London Editor in February 1871 and became its Editor on 1 January 1872.

In 1874, Scott married Rachel Cook, who had been one of the first undergraduates of the College for Women, Hitchin (later Girton College, Cambridge). She died in the midst of the dispute over Taylor's will. Their daughter Madeline married long-time Guardian contributor C. E. Montague. Their eldest son Lawrence died in 1908, aged thirty-one, after contracting tuberculosis. His middle son John became the Manchester Guardian's manager and founder of the Scott Trust. Youngest son Ted, who succeeded his father as Editor, drowned in a sailing accident after less than three years in the post. John and Ted Scott jointly inherited the ownership of the Manchester Guardian & Evening News Ltd.; after Ted's death John passed it on to the Scott Trust.

In 1882, having built a new house in Darley Dale in Derbyshire, Sir Joseph Whitworth leased The Firs in Fallowfield in Manchester to his friend C. P. Scott. After Scott's death the house became the property of the University of Manchester, and was the Vice-Chancellor's residence until 1991. Scott used to travel into his Cross Street office by bicycle.

In 1886, Scott fought his first general election as a Liberal candidate, an unsuccessful attempt in the Manchester North East constituency; he stood again for the same seat in 1891 and 1892. He was elected at the 1895 election as MP for Leigh, and thereafter spent long periods away in London during the parliamentary session. His combined position as a Liberal backbencher, the Editor of an important Liberal newspaper, and the President of the Manchester Liberal Federation made him an influential figure in Liberal circles, albeit in the middle of a long period of opposition. He was re-elected at the 1900 election despite the unpopular stand against the Boer War that the Guardian had taken, but retired from Parliament at the time of the Liberal landslide victory in 1906, when he was occupied with the difficult process of becoming owner of the newspaper he edited.

Scott is the grandfather of Evelyn Aubrey Montague (1900–1948), the Olympic athlete and Journalist depicted in the film Chariots of Fire. Evelyn, like his grandfather, wrote for the Manchester Guardian, and became its London Editor.

In 1905, the Manchester Guardian's owner, Edward Taylor, died. His will provided that the trustees of his estate should give Scott first refusal on the copyright of the Manchester Guardian at £10,000, and recommended that they should offer him the offices and printing works of the paper on "moderate and reasonable terms". However, they were not required to sell it at all, and could continue to run the paper themselves "on the same lines and in the same spirit as heretofore". Furthermore, one of the trustees was a nephew of Taylor and would financially benefit from forcing up the price at which Scott could buy the paper, and another was the Manchester Guardian's manager, but faced losing his job if Scott took control. Scott was therefore forced to dig deep to buy the paper: he paid a total of £240,000, taking large loans from his sisters and from Taylor's widow (who had been his chief supporter among the trustees) to do so. Taylor's other paper, the Manchester Evening News, was inherited by his nephews in the Allen family. Scott made an agreement to buy the MEN in 1922 and gained full control of it in 1929.

Although a lifelong liberal, Scott had a troubled relationship with Lloyd George. Traditionally on the radical left of the party he was astounded by the pro-Zionist line taken by the Coalitionists, a position he heartily endorsed. On 4 August 1914 it was Scott that the Chancellor of Exchequer turned to for a favourable editorial comment. Whilst in London he stayed at the central location of Nottingham Place from where he could gather news intelligence on European developments. Would the government declare war? Scott recorded that the German ambassador had been deceived into believing that Britain would stay outside the conflict. But liberal policy always accentuated one of "continuity" of free radicals at its heart. But for Scott the Cabinet remained too reticent to act, too timid, clearly an indication of his movement towards MacDonald and Labour. They espoused a pacifist position in Britain, which he was warned was "pro-German". He was a friend of the radical Charles Hobhouse MP, who was not in the War Cabinet.

Perhaps most instructive of his communicating skills was the introduction he made of Chaim Weizmann to Lloyd George. He struck up a remarkable friendship with the Jewish émigré, whose intellectual brilliance and Business savvy was lately attracting the attention of even the Tory Press and senior ministers. Scott wrote regularly in the New Statesman dealing frankly and openly with the Herbert Memorandum; they would all come together in Downing Street for a top-level summit on the Palestine Question. But Scott also investigated the wartime traitor Sir Roger Casement. His story was linked to Collins' Dublin builder T.P. O'Connor, who more than any Irishman had served to hide the general's presence from the RIC. In Ulster Joe Devlin warned the Left of the impending violence should they not heed the warnings contained in the newspapers about the coming military occupation. The Curragh incident had profoundly shocked the establishment in Ireland; on 27 July 1916 Scott would hold just a one-off meeting with General Macready, Lord Reading and Lloyd George in the aftermath of the Easter Rising.

In a 1921 essay marking the Manchester Guardian's centenary (at which time he had served nearly fifty years as editor), Scott put down his opinions on the role of the newspaper. He argued that the "primary office" of a newspaper is accurate news reporting, saying "comment is free, but facts are sacred". Even editorial comment has its responsibilities: "It is well to be frank; it is even better to be fair". A newspaper should have a "soul of its own", with staff motivated by a "common ideal": although the Business side of a newspaper must be competent, if it becomes dominant the paper will face "distressing consequences".

While supporting female suffrage, Scott was hostile to militant suffragettes in his editorials, accusing them of employing 'every engine of misguided fanaticism in order to wreck, if it be in their power, the fair prospects of their cause' He was just as disturbed by the General Strike of 1926, asking 'Will not the General Strike cease to be counted henceforth as a possible or legitimate weapon of industrial warfare' Irish rebels were authors of their own destruction, he thought. On the execution of Padraig Pearse and James Connolly after the Easter Uprising in Dublin, he wrote that 'it is a fate which they invoked and of which they probably would not complain'.

C. P. Scott remained Editor of the Manchester Guardian until 1 July 1929, at which time he was eighty-three years old and had been Editor for exactly fifty-seven and a half years. His successor as Editor was his youngest son, Ted Scott, though C. P. remained as Governing Director of the company and was at the Guardian offices most evenings. He died in the small hours of New Year's Day 1932.

Scott was made a Freeman of the City of Manchester in 1930.