Fairbanks was born in a log cabin near Unionville Center, Ohio, the son of Mary Adelaide (Smith) and Loriston Monroe Fairbanks, a wagon-maker. Fairbanks's ancestry traced back to Puritan followers of Oliver Cromwell, with Jonathan Fairbanks being the first family member to reach America, in 1632. Fairbanks in his youth saw his family's home used as a hiding place for runaway slaves. After attending country schools and working on a farm, Fairbanks attended Ohio Wesleyan University, where he graduated in 1872. While there, Fairbanks was co-editor of the school newspaper with Cornelia Cole, whom he married after both graduated from the school.

Fairbanks' first position was as an agent of the Associated Press in Pittsburgh, Pennsylvania, reporting on political rallies for Horace Greeley during the 1872 presidential election. He studied law in Pittsburgh before moving to Cleveland, Ohio, where he continued to work for the Associated Press while attending a semester at Cleveland Law School to complete his legal education. Fairbanks was admitted to the Ohio bar in 1874, and moved to Indianapolis, Indiana. In 1875 he received his master of arts degree from Ohio Wesleyan.

Prior to the 1888 Republican National Convention, federal judge Walter Q. Gresham sought Fairbanks' help in seeking the as a Republican nomination for U.S. President. When Benjamin Harrison won the nomination, Fairbanks supported him and made campaign speeches on his behalf. Afterwards, Fairbanks began to take an even greater interest in politics, and made campaign speeches on Harrison's behalf again in the campaign of 1892. In 1893, Fairbanks was a candidate for the United States Senate, but Democrats controlled the state legislature and reelected incumbent Democrat David Turpie.

Born in Unionville Center, Ohio, Fairbanks moved to Indianapolis after graduating from Ohio Wesleyan University. He became an attorney and railroad financier, working under railroad magnate Jay Gould. Fairbanks delivered the keynote address at the 1896 Republican National Convention and won election to the Senate the following year. In the Senate, he became an adviser of President william McKinley and served on a commission that helped settle the Alaska boundary dispute.

In 1894, Fairbanks was the most visible organizer and speaker on behalf of Republicans in elections for the state legislature. He was credited with delivering Republican majorities to both the Indiana House of Representatives and Indiana Senate, ensuring that a Republican would be elected to succeed Daniel W. Voorhees in the United States Senate at the end of Voorhees' term in 1897. At the 1896 Republican National Convention, Fairbanks was both temporary chairman and keynote speaker, further raising his public profile. Fairbanks was the most likely Republican candidate for Voorhees' seat, and in January 1897 Republican legislators formally chose him as their nominee. On January 19, 1897, Fairbanks was elected to the Senate, and he took his seat on March 4.

Fairbanks received the honorary degree of LL.D. from Ohio Wesleyan University in 1901, and from Northwestern University in 1907. The Charles W. Fairbanks Professor of Politics and Government position at Ohio Wesleyan University is named for him.

Fairbanks was elected Vice President of the United States in 1904 on the Republican ticket with Theodore Roosevelt and served a four-year term, 1905 to 1909. He became the first vice President to serve a complete term without casting any tie-breaking votes as President of the Senate. Fairbanks, a conservative whom Roosevelt had once labeled a "reactionary machine politician" (and who had been caricatured as a "Wall Street Puppet" during the campaign), actively worked against Roosevelt's progressive "Square Deal" program. Roosevelt did not give Fairbanks a significant role in his administration, and (having chosen not to seek reelection) strongly promoted william Howard Taft as his potential successor in 1908. Fairbanks also sought the Republican nomination for President, but was unsuccessful and returned to the practice of law. In 1912, Fairbanks supported Taft's reelection against Roosevelt's Bull Moose candidacy.

In 1916, Fairbanks was in charge of establishing the platform for the Republican party. In 1916, he sought the Republican presidential nomination, and although he failed in that bid, he did win the nomination for vice President as the running-mate of Charles Evans Hughes on June 10. Five months later, Hughes and Fairbanks lost a close election to the Democratic incumbents Woodrow Wilson and Thomas Marshall. Fairbanks is the most recent former Vice President to seek reelection for a non-consecutive term (with Adlai Stevenson I before him). Fairbanks once again resumed the practice of law in Indianapolis, but his health started to fail.

He died of nephritis in his home on June 4, 1918. He was interred in Crown Hill Cemetery.

In 1966, the Indiana Sesquicentennial Commission placed an Indiana historical marker in front of Fairbanks' home at 30th and Meridian Streets in Indianapolis. On May 15, 2009, an Ohio historical marker was dedicated in Unionville Center, commemorating Fairbanks' birthplace.

During his eight years in the U.S. Senate, Fairbanks served as a key adviser to McKinley during the Spanish–American War and was also the Chairman of the Committee on Immigration and the Committee on Public Buildings and Grounds. In 1898, Fairbanks was appointed a member of the United States and British Joint High Commission which met in Quebec City for the adjustment of Canadian questions, including the boundary dispute about Alaska.