Born in Wegeleben (now in Saxony-Anhalt) in the Kingdom of Prussia in the German Empire, Bormann was the son of Theodor Bormann (1862–1903), a post office employee, and his second wife, Antonie Bernhardine Mennong. The family was Lutheran. He had two half-siblings (Else and Walter Bormann) from his father's earlier marriage to Louise Grobler, who died in 1898. Antonie Bormann gave birth to three sons, one of whom died in infancy. Martin (born 1900) and Albert (born 1902) survived to adulthood. Theodor died when Bormann was three, and his mother soon remarried.

Bormann's studies at an agricultural trade high school were interrupted when he joined the 55th Field Artillery Regiment as a gunner in June 1918, in the last days of World War I. He never saw action, but served garrison duty until February 1919. After working a short time in a cattle feed mill, Bormann became estate manager of a large farm in Mecklenburg. Shortly after starting work at the estate, Bormann joined an antisemitic landowners association. While hyperinflation in the Weimar Republic meant that money was worthless, foodstuffs stored on farms and estates became ever more valuable. Many estates, including Bormann's, had Freikorps units stationed on site to guard the crops from pillaging. Bormann joined the Freikorps organisation headed by Gerhard Roßbach in 1922, acting as section leader and treasurer.

Bormann joined a paramilitary Freikorps organisation in 1922 while working as manager of a large estate. He served nearly a year in prison as an accomplice to his friend Rudolf Höss (later commandant of Auschwitz concentration camp) in the murder of Walther Kadow. Bormann joined the Nazi Party in 1927 and the Schutzstaffel (SS) in 1937. He initially worked in the party's insurance Service, and transferred in July 1933 to the office of Deputy Führer Rudolf Hess, where he served as chief of staff.

On 17 March 1924 Bormann was sentenced to a year in Elisabethstrasse Prison as an accomplice to his friend Rudolf Höss in the murder of Walther Kadow. The perpetrators believed Kadow had tipped off the French occupation authorities in the Ruhr District that fellow Freikorps member Albert Leo Schlageter was carrying out sabotage operations against French industries. Schlageter was arrested and was executed on 23 May 1923. On the night of 31 May, Höss, Bormann and several others took Kadow into a meadow out of town, where he was beaten and his throat cut. After one of the perpetrators confessed, police dug up the body and laid charges in July. Bormann was released from prison in February 1925. He joined the Frontbann, a short-lived Nazi Party paramilitary organisation created to replace the Sturmabteilung (SA; storm detachment or assault division), which had been banned in the aftermath of the failed Munich Putsch. Bormann returned to his job at Mecklenburg and remained there until May 1926, when he moved in with his mother in Oberweimar.

Bormann took a job with Der Nationalsozialist, a weekly paper edited by NSDAP member Hans Severus Ziegler, who was deputy Gauleiter (party leader) for Thuringia. After joining the NSDAP in 1927, Bormann began duties as regional press officer, but his lack of public-speaking skills made him ill-suited to this position. He soon put his organisational skills to use as Business manager for the Gau (region). He moved to Munich in October 1928, where he worked in the SA insurance office. Initially the NSDAP provided coverage through insurance companies for members who were hurt or killed in the frequent violent skirmishes with members of other political parties. As insurance companies were unwilling to pay out claims for such activities, in 1930 Bormann set up the Hilfskasse der NSDAP (NSDAP Auxiliary Fund), a benefits and relief fund directly administered by the party. Each party member was required to pay premiums and might receive compensation for injuries sustained while conducting party Business. Payments out of the fund were made solely at Bormann's discretion. He began to gain a reputation as a financial expert, and many party members felt personally indebted to him after receiving benefits from the fund. In addition to its stated purpose, the fund was used as a last-resort source of funding for the NSDAP, which was chronically short of money at the time. After the NSDAP's success in the 1930 general election, where they won 107 seats, party membership grew dramatically. By 1932 the fund was collecting 3 million Reichsmarks per year.

Bormann also worked on the staff of the SA from 1928 to 1930, and while there he founded the National Socialist Automobile Corps, precursor to the National Socialist Motor Corps. The organisation was responsible for co-ordinating the donated use of motor vehicles belonging to party members, and later expanded to training members in Automotive skills.

On 2 September 1929, Bormann married 19-year-old Gerda Buch, whose father, Major Walter Buch, served as a chairman of the Untersuchung und Schlichtungs-Ausschuss (USCHLA; Investigation and Settlement Committee), which was responsible for settling disputes within the party. Hitler was a frequent visitor to the Buch house, and it was here that Bormann met him. Hess and Hitler served as witnesses at the wedding. Bormann also had a series of mistresses, including Manja Behrens, an Actress.

While Article 24 of the National Socialist Program called for conditional toleration of Christian denominations and a Reichskonkordat (Reich Concordat) treaty with the Vatican was signed in 1933, purporting to guarantee religious freedom for Catholics, Hitler believed that religion was fundamentally incompatible with National Socialism. Bormann, who was strongly anti-Christian, agreed; he stated publicly in 1941 that "National Socialism and Christianity are irreconcilable." Out of political expediency, Hitler intended to postpone the elimination of the Christian churches until after the war. However, his repeated hostile statements against the church indicated to his subordinates that a continuation of the Kirchenkampf (church struggle) would be tolerated and even encouraged.

Bormann used his position to create an extensive bureaucracy and involve himself as much as possible in the decision making. He gained acceptance into Hitler's inner circle, and accompanied him everywhere, providing briefings and summaries of events and requests. He began acting as Hitler's personal secretary on 12 August 1935. Bormann assumed Hess' former duties, with the title of Head of the Parteikanzlei (Party Chancellery), after Hess' solo FLIGHT to Britain on 10 May 1941 to seek peace negotiations with the British government. He had final approval over civil Service appointments, reviewed and approved legislation, and by 1943 had de facto control over all domestic matters. Bormann was one of the leading proponents of the ongoing persecution of the Christian churches and favoured harsh treatment of Jews and Slavs in the areas conquered by Germany during World War II.

Bormann was one of the leading proponents of the ongoing persecution of the Christian churches. In February 1937 he decreed that members of the clergy should not be admitted to the NSDAP. The following year he ruled that any members of the clergy who were holding party offices should be dismissed, and that any party member who was considering entering the clergy had to give up his party membership. While Bormann's push to force the closure of theological departments at Reich universities was unsuccessful, he was able to reduce the amount of religious instruction provided in public schools to two hours per week and mandated the removal of crucifixes from classrooms. Speer notes in his memoirs that while drafting plans for Welthauptstadt Germania, the planned rebuilding of Berlin, he was told by Bormann that churches were not to be allocated any building sites.

The office of the Deputy Führer had final approval over civil Service appointments, and Bormann reviewed the personnel files and made the decisions regarding appointments. This power impinged on the purview of Minister of the Interior Wilhelm Frick, and was an Example of the overlapping responsibilities typical of the Nazi regime. Bormann travelled everywhere with Hitler, including trips to Austria in 1938 after the Anschluss (the annexation of Austria into Nazi Germany), and to the Sudetenland after the signing of the Munich Agreement later that year. Bormann was placed in charge of organising the 1938 Nuremberg Rally, a major annual party event.

In 1935, Bormann was appointed as overseer of renovations at the Berghof, Hitler's property at Obersalzberg. In the early 1930s, Hitler bought the property, which he had been renting since 1925 as a vacation retreat. After he became chancellor, Hitler drew up plans for expansion and remodelling of the main house and put Bormann in charge of construction. Bormann commissioned the construction of barracks for the SS guards, roads and footpaths, garages for motor vehicles, a guesthouse, accommodation for staff, and other amenities. Retaining title in his own name, Bormann bought up adjacent farms until the entire complex covered 10 square kilometres (3.9 sq mi). Members of the inner circle built houses within the perimeter, beginning with Hermann Göring, Albert Speer, and Bormann himself. Bormann commissioned the building of the Kehlsteinhaus (Eagle's Nest), a tea house high above the Berghof, as a gift to Hitler on his fiftieth birthday (20 April 1939). Hitler seldom used the building, but Bormann liked to impress guests by taking them there.

Knowing Hitler viewed Slavic people as inferior, Bormann opposed the introduction of German Criminal law into the conquered eastern territories. He lobbied for and eventually achieved a strict separate penal code that implemented martial law for the Polish and Jewish inhabitants of these areas. The "Edict on Criminal Law Practices against Poles and Jews in the Incorporated Eastern Territories", promulgated 4 December 1941, permitted corporal punishment and death sentences for even the most trivial of offences.

Preoccupied with military matters and spending most of his time at his military headquarters on the eastern front, Hitler came to rely more and more on Bormann to handle the domestic policies of the country. On 12 April 1943, Hitler officially appointed Bormann as Personal Secretary to the Führer. By this time Bormann had de facto control over all domestic matters, and this new appointment gave him the power to act in an official capacity in any matter.

Bormann and Himmler shared responsibility for the Volkssturm (people's militia), which drafted all remaining able-bodied men aged 16 to 60 into a last-ditch militia founded on 18 October 1944. Poorly equipped and trained, the men were sent to fight on the eastern front, where nearly 175,000 of them were killed without having any discernible impact on the Soviet advance.

Gerda Bormann and the children fled Obersalzberg for Italy on 25 April 1945 after an Allied air attack. She died of cancer on 26 April 1946, in Merano, Italy. Bormann's children survived the war, and were cared for in foster homes. His eldest son, Martin, was ordained a Roman Catholic priest and worked in Africa as a missionary. He later left the priesthood and married.

During the chaotic days after the war, contradictory reports arose as to Bormann's whereabouts. Sightings were reported in Argentina, Spain, and elsewhere. Bormann's wife was placed under surveillance in case he tried to contact her. Jakob Glas, Bormann's long-time chauffeur, insisted that he saw Bormann in Munich in July 1946. In case Bormann was still alive, multiple public notices about the upcoming Nuremberg trials were placed in newspapers and on the radio in October and November 1945 to notify him of the proceedings against him.

Over the coming years, several organisations, including the CIA and the West German Government, attempted to locate Bormann without success. In 1964, the West German government offered a reward of 100,000 Deutsche Marks for information leading to Bormann's capture. Sightings were reported at points all over the world, including Australia, Denmark, Italy, and South America. In his autobiography, Nazi intelligence officer Reinhard Gehlen claimed that Bormann had been a Soviet spy, and that he had escaped to Moscow. Nazi hunter Simon Wiesenthal believed that Bormann was living in South America. The West German government declared that its hunt for Bormann was over in 1971.

Excavations on 20–21 July 1965 at the site specified by Axmann and Krumnow failed to locate the bodies. However, on 7 December 1972, construction workers uncovered human remains near Lehrter station in West Berlin just 12 m (39 ft) from the spot where Krumnow claimed he had buried them. Upon autopsy, fragments of glass were found in the jaws of both skeletons, suggesting that the men had committed suicide by biting cyanide capsules to avoid capture. Dental records—reconstructed from memory in 1945 by Dr. Hugo Blaschke—identified one skeleton as Bormann's, and damage to the collarbone was consistent with injuries that Bormann's sons reported he had sustained in a riding accident in 1939. Forensic examiners determined that the size of the skeleton and the shape of the skull were identical to Bormann's. Likewise, the second skeleton was deemed to be Stumpfegger's, since it was of similar height to his last known proportions. Composite photographs, where images of the skulls were overlaid on photographs of the men's faces, were completely congruent. Facial reconstruction was undertaken in early 1973 on both skulls to confirm the identities of the bodies. Soon afterward, the West German government declared Bormann dead. The family was not permitted to cremate the body, in case further forensic examination later proved necessary.

The remains were conclusively identified as Bormann's in 1998 when German authorities ordered genetic testing on fragments of the skull. The testing was led by Wolfgang Eisenmenger, Professor of Forensic Science at Ludwig Maximilian University of Munich. Tests using DNA from one of his relatives identified the skull as that of Bormann. Bormann's remains were cremated and the ashes were scattered in the Baltic Sea on 16 August 1999.