McCarthy was born in 1908 on a farm in the Town of Grand Chute in Outagamie County, Wisconsin, the fifth of seven children. His mother, Bridget (Tierney), was from County Tipperary, Ireland. His father, Timothy McCarthy, was born in the United States of America, the son of an Irish father and a German mother. McCarthy dropped out of junior high school at age 14 to help his parents manage their farm. He entered Little Wolf High School, in Manawa, Wisconsin, when he was 20 and graduated in one year.

Robert Kennedy was chosen by McCarthy as a counsel for his investigatory committee, but resigned after six months due to disagreements with McCarthy and Committee Counsel Roy Marcus Cohn. Joseph Kennedy had a national network of contacts and became a vocal supporter, building McCarthy's popularity among Catholics and making sizable contributions to McCarthy's campaigns. The Kennedy patriarch hoped that one of his sons would be President. Mindful of the anti-Catholic prejudice Al Smith faced during his 1928 campaign for that office, Joseph Kennedy supported McCarthy as a national Catholic Politician who might pave the way for a younger Kennedy's presidential candidacy.

Diplomat George F. Kennan drew on his State Department experience to provide his view that "The penetration of the American governmental services by members or agents (conscious or otherwise) of the American Communist Party in the late 1930s was not a figment of the imagination ... it really existed; and it assumed proportions which, while never overwhelming, were also not trivial." Kennan wrote that under the Roosevelt administration "warnings which should have been heeded fell too often on deaf or incredulous ears." However, Kennan made his assessment before the revelation of the Venona decrypts. The previous cautious assessments had to be revised. Not a few but "hundreds of American Communists abetted Soviet espionage in the United States" in the 1930s and 1940s. No modern government had been more thoroughly penetrated. Plus, only a tiny fraction of the Venona intercepts have been decrypted (about 3%), so no one knows the entire extent of the penetration. All anyone can know for sure is that the Soviet penetration into the United States government was massive.

McCarthy was admitted to the bar in 1935. While working at a law firm in Shawano, Wisconsin, he launched an unsuccessful campaign for district attorney as a Democrat in 1936. In 1939, McCarthy had better success when he ran for the nonpartisan elected post of 10th District circuit judge. (During his years as an attorney, McCarthy made money on the side by gambling.)

McCarthy's hearings are often incorrectly conflated with the hearings of the House Committee on Un-American Activities (HUAC). HUAC is best known for the investigation of Alger Hiss and for its investigation of the Hollywood film industry, which led to the blacklisting of hundreds of actors, Writers, and Directors. HUAC was a House committee, and as such had no formal connection with McCarthy, who served in the Senate, although the existence of the House Un-American Activities Committee thrived in part as a result of McCarthy's activities. HUAC was active for 37 years (1938-1975).

"In Congress, there was little doubt that homosexuals did not belong in sensitive government positions." Since the late 1940s, the government had been dismissing about five homosexuals a month from civilian posts; by 1954, the number had grown twelve-fold. "Mixed in with the hysterics were some logic, though: homosexuals faced condemnation and discrimination, and most of them—wishing to conceal their orientation—were vulnerable to blackmail." DCI Roscoe Hillenkoetter was called to Congress to testify on homosexuals being employed at the CIA. He said, "The use of homosexuals as a control mechanism over individuals recruited for espionage is a generally accepted technique which has been used at least on a limited basis for many years." As soon as the DCI said these words, his aide signaled to take the remainder of the DCI's testimony off the record. Political Historian David Barrett uncovered Hillenkoetter's notes, which reveal the remainder of the statement: "While this agency will never employ homosexuals on its rolls, it might conceivably be necessary, and in the past has actually been valuable, to use known homosexuals as agents in the field. I am certain that if Josef Stalin or a member of the Politburo or a high satellite official were known to be a homosexual, no member of this committee or of the Congress would balk against our use of any technique to penetrate their operations... after all, intelligence and espionage is, at best, an extremely dirty Business." The Senators reluctantly agreed the CIA had to be flexible.

McCarthy's judicial career attracted some controversy because of the speed with which he dispatched many of his cases as he worked to clear the heavily backlogged docket he had inherited. Wisconsin had strict divorce laws, but when McCarthy heard divorce cases, he expedited them whenever possible, and he made the needs of children involved in contested divorces a priority. When it came to other cases argued before him, McCarthy compensated for his lack of experience as a jurist by demanding and relying heavily upon precise briefs from the contesting attorneys. The Wisconsin Supreme Court reversed a low percentage of the cases he heard, but he was also censured in 1941 for having lost evidence in a price fixing case.

He served as an intelligence briefing officer for a dive bomber squadron in the Solomon Islands and Bougainville for 30 months (August 1942 – February 1945), and held the rank of captain by the time he resigned his commission in April 1945. He volunteered to fly twelve combat missions as a gunner-observer, acquiring (or perhaps giving himself) the nickname "Tail-Gunner Joe". McCarthy remained in the Marine Corps Reserve after the war, attaining the rank of major.

In his campaign, McCarthy attacked La Follette for not enlisting during the war, although La Follette had been 46 when Pearl Harbor was bombed. He also claimed La Follette had made huge profits from his Investments while he, McCarthy, had been away fighting for his country. In fact, McCarthy had invested in the stock market himself during the war, netting a profit of $42,000 in 1943 (over $604,000 in 2017 dollars). La Follette's Investments consisted of partial interest in a radio station, which earned him a profit of $47,000 over two years.

In an incident for which he would be widely criticized, McCarthy lobbied for the commutation of death sentences given to a group of Waffen-SS Soldiers convicted of war crimes for carrying out the 1944 Malmedy massacre of American prisoners of war. McCarthy was critical of the convictions because of allegations of torture during the interrogations that led to the German soldiers' confessions. He charged that the U.S. Army was engaged in a coverup of judicial misconduct, but never presented any evidence to support the accusation. Shortly after this, a poll of the Senate press corps voted McCarthy "the worst U.S. senator" currently in office.

There is some dispute about whether or not McCarthy actually gave the number of people on the list as being "205" or "57". In a later telegram to President Truman, and when entering the speech into the Congressional Record, he used the number 57. The origin of the number 205 can be traced: in later debates on the Senate floor, McCarthy referred to a 1946 letter that then–Secretary of State James Byrnes sent to Congressman Adolph J. Sabath. In that letter, Byrnes said State Department security investigations had resulted in "recommendation against permanent employment" for 284 persons, and that 79 of these had been removed from their jobs; this left 205 still on the State Department's payroll. In fact, by the time of McCarthy's speech only about 65 of the employees mentioned in the Byrnes letter were still with the State Department, and all of these had undergone further security checks.

From the start of his notoriety, McCarthy served as a favorite subject for political cartoonists. He was traditionally depicted in a negative light, normally pertaining to McCarthyism and his accusations. Herblock's cartoon that coined the term McCarthyism appeared less than two months after the senator's now famous February 1950 speech in Wheeling, West Virginia. In 1953, the popular daily comic strip Pogo introduced the character Simple J. Malarkey, a pugnacious and conniving wildcat with an unmistakable physical resemblance to McCarthy. After a worried Rhode Island newspaper Editor protested to the syndicate that provided the strip, creator Walt Kelly began depicting the Malarkey character with a bag over his head, concealing his features. The explanation was that Malarkey was hiding from a Rhode Island Red hen, a clear reference to the controversy over the Malarkey character.

After two months of hearings and deliberations, the Watkins Committee recommended that McCarthy be censured on two of the 46 counts: his contempt of the Subcommittee on Rules and Administration, which had called him to testify in 1951 and 1952, and his abuse of General Zwicker in 1954. The Zwicker count was dropped by the full Senate on the grounds that McCarthy's conduct was arguably "induced" by Zwicker's own behavior. In place of this count, a new one was drafted regarding McCarthy's statements about the Watkins Committee itself.

McCarthy won reelection in 1952 with 54% of the vote, defeating former Wisconsin State Attorney General Thomas E. Fairchild but, as stated above, badly trailing a Republican ticket which otherwise swept the state of Wisconsin; all the other Republican winners, including Eisenhower himself, received at least 60% of the Wisconsin vote. Those who expected that party loyalty would cause McCarthy to tone down his accusations of Communists being harbored within the government were soon disappointed. Eisenhower had never been an admirer of McCarthy, and their relationship became more hostile once Eisenhower was in office. In a November 1953 speech that was carried on national television, McCarthy began by praising the Eisenhower Administration for removing "1,456 Truman holdovers who were ... gotten rid of because of Communist connections and activities or perversion." He then went on to complain that John Paton Davies Jr. was still "on the payroll after eleven months of the Eisenhower Administration," even though Davies had actually been dismissed three weeks earlier, and repeated an unsubstantiated accusation that Davies had tried to "put Communists and espionage agents in key spots in the Central Intelligence Agency." In the same speech, he criticized Eisenhower for not doing enough to secure the release of missing American pilots shot down over China during the Korean War. By the end of 1953, McCarthy had altered the "twenty years of treason" catchphrase he had coined for the preceding Democratic administrations and began referring to "twenty-one years of treason" to include Eisenhower's first year in office.

With the beginning of his second term as senator in 1953, McCarthy was made chairman of the Senate Committee on Government Operations. According to some reports, Republican Leaders were growing wary of McCarthy's methods and gave him this relatively mundane panel rather than the Internal Security Subcommittee—the committee normally involved with investigating Communists—thus putting McCarthy "where he can't do any harm," in the words of Senate Majority Leader Robert A. Taft. However, the Committee on Government Operations included the Senate Permanent Subcommittee on Investigations, and the mandate of this subcommittee was sufficiently flexible to allow McCarthy to use it for his own investigations of Communists in the government. McCarthy appointed Roy Cohn as chief counsel and 27-year-old Robert F. Kennedy as an assistant counsel to the subcommittee. Cohn brought with him, as his assistant, Gerald David Schine, heir to a hotel-chain fortune, who would bear much responsibility for triggering McCarthy's eventual downfall.

As his fame grew, McCarthy increasingly became the target of ridicule and parody. He was impersonated by nightclub and radio impressionists and was satirized in Mad magazine, on The Red Skelton Show, and elsewhere. Several comedy songs lampooning the senator were released in 1954, including "Point of Order" by Stan Freberg and Daws Butler, "Senator McCarthy Blues" by Hal Block, and unionist folk singer Joe Glazer's "Joe McCarthy's Band", sung to the tune of "McNamara's Band". Also in 1954, the radio comedy team Bob and Ray parodied McCarthy with the character "Commissioner Carstairs" in their soap opera spoof "Mary Backstayge, Noble Wife". That same year, the Canadian Broadcasting Corporation radio network broadcast a satire, The Investigator, whose title character was a clear imitation of McCarthy. A recording of the show became popular in the United States, and was reportedly played by President Eisenhower at cabinet meetings.

The 1953 fiction novel "Mr. Costello, Hero" by Theodore Sturgeon was described by noted Journalist and author Paul Williams as "the all-time great story about Senator Joseph McCarthy, who he was and how he did what he did." The novel was adapted in 1958 by X Minus One into a radio teleplay and broadcast on July 3, 1956. In a 1977 interview Sturgeon commented that it was his concerns about the ongoing McCarthy Hearings that prompted him to write the story.

In the summer of 1957, a special election was held to fill McCarthy's seat. In the primaries, voters in both parties turned away from McCarthy's legacy. The Republican primary was won by Walter J. Kohler, Jr., who called for a clean break from McCarthy's approach; he defeated former Congressman Glenn Robert Davis, who charged that Eisenhower was soft on Communism. The Democratic candidate, william Proxmire, called the late McCarthy "a disgrace to Wisconsin, to the Senate, and to America". On August 27, Proxmire won the election, serving in the seat for 32 years.

A more serious fictional portrayal of McCarthy played a central role in the 1959 novel The Manchurian Candidate by Richard Condon. The character of Senator John Iselin, a demagogic anti-communist, is closely modeled on McCarthy, even to the varying numbers of Communists he asserts are employed by the federal government. He remains a major character in the 1962 film version.

McCarthy was portrayed by Peter Boyle in the 1977 Emmy-winning television movie Tail Gunner Joe, a dramatization of McCarthy's life. Archival footage of McCarthy himself was used in the 2005 movie Good Night, and Good Luck about Edward R. Murrow and the See It Now episode that challenged McCarthy. McCarthy was also portrayed by Joe Don Baker in the 1992 HBO film Citizen Cohn. In the German-French docu-drama "The Real American – Joe McCarthy" (2012), directed by Lutz Hachmeister, McCarthy is portrayed by the British actor and Comedian John Sessions.

Anslinger decided to give McCarthy access to heroin in secret from a pharmacy in Washington, DC. The heroin was paid for by the Federal Bureau of Narcotics, right up to McCarthy's death. Anslinger never publicly named McCarthy, and he threatened a Journalist who uncovered the story with prison. However, McCarthy's identity was known to Anslinger's agents, and Journalist Maxine Cheshire confirmed his identity with Will Oursler, co-author of The Murderers, in 1978.

R.E.M.'s song "Exhuming McCarthy" from their 1987 album Document largely deals with McCarthy and contains sound clips from the Army-McCarthy Hearings.

This subcommittee would be the scene of some of McCarthy's most publicized exploits. When the records of the closed executive sessions of the subcommittee under McCarthy's chairmanship were made public in 2003–04, Senators Susan Collins and Carl Levin wrote the following in their preface to the documents:

William Bennett, former Reagan Administration Secretary of Education, summed up his perspective in his 2007 book America: The Last Best Hope:

In addition to the Tydings–Butler race, McCarthy campaigned for several other Republicans in the 1950 elections, including Everett Dirksen against Democratic incumbent and Senate Majority Leader Scott W. Lucas. Dirksen, and indeed all the candidates McCarthy supported, won their elections, and those he opposed lost. The elections, including many that McCarthy was not involved in, were an overall Republican sweep. Although his impact on the elections was unclear, McCarthy was credited as a key Republican campaigner. He was now regarded as one of the most powerful men in the Senate and was treated with new-found deference by his colleagues. In the 1952 Senate elections McCarthy was returned to his Senate seat with 54.2% of the vote, compared to Democrat Thomas Fairchild's 45.6%. (But as explained below, he finished well behind a Republican ticket that Dwight Eisenhower, then seeking to become President, headed—so far behind that ticket, in fact, that Eisenhower's presence on the ticket and Wisconsin's overwhelming Republican support were all that kept McCarthy from losing his reelection campaign.)

McCarthy remains a controversial figure. Some scholars assert that new evidence—in the form of Venona-decrypted Soviet messages, Soviet espionage data now opened to the West, and newly released transcripts of closed hearings before McCarthy's subcommittee—has partially vindicated McCarthy by showing that many of his identifications of Communists were correct and that the scale of Soviet espionage activity in the United States during the 1940s and 1950s was larger than many scholars suspected. After reviewing evidence from Venona and other sources, Historian John Earl Haynes concluded that, of 159 people identified on lists used or referenced by McCarthy, evidence was substantial that nine had aided Soviet espionage efforts. He suggested that a majority of those on the lists could legitimately have been considered security risks, but that a substantial minority could not. Many other scholars, including some generally regarded as conservative, have opposed these views.