Williams was born on 14 June 1950 in Swansea, Wales, into a Welsh-speaking family. He was the only child of Aneurin Williams (known as "Del") and his wife Nancy Delphine Williams (née Morris) – Presbyterians who became Anglicans in 1961. He was educated at the state-sector Dynevor School in Swansea, before going on to study theology at Christ's College, Cambridge, whence he graduated with starred first-class honours. He then went to Wadham College, Oxford, where he studied under A. M. Allchin and graduated with a Doctor of Philosophy degree in 1975 with a thesis entitled The Theology of Vladimir Nikolaievich Lossky: An Exposition and Critique.

Williams lectured and trained for ordination at the College of the Resurrection in Mirfield, West Yorkshire, for two years (1975–1977). In 1977 he was ordained as a deacon at Ely Cathedral, returning to Cambridge to teach theology as a tutor (as well as chaplain and Director of Studies) at Westcott House. While there, he was ordained a priest in 1978.

Williams did not have a formal curacy until 1980, when he served at St George's, Chesterton, until 1983, after having been appointed a university lecturer in divinity at Cambridge. In 1984 he became dean and chaplain of Clare College and, in 1986 at the age of 36, he was appointed to the Lady Margaret Professor of Divinity at Oxford, a position which brought with it appointment to a residentiary canonry of Christ Church Cathedral. In 1989 he received the degree of Doctor of Divinity (DD) and, in 1990, was elected a Fellow of the British Academy (FBA).

Williams is also a poet and translator of poetry. His collection The Poems of Rowan Williams, published by Perpetua Press, was longlisted for the Wales Book of the Year award in 2004. Beside his own poems, which have a strong spiritual and landscape flavour, the collection contains several fluent translations from Welsh poets. He was criticised in the press for allegedly supporting a "pagan organisation", the Welsh Gorsedd of Bards, which promotes Welsh language and literature and uses druidic ceremonial but is actually not religious in nature. His wife, Jane Williams, is a Writer and lecturer in theology. They married on 4 July 1981 and have two children who were also state educated.

Williams, a scholar of the Church Fathers and an Historian of Christian spirituality, wrote in 1983 that orthodoxy should be seen "as a tool rather than an end in itself..." It is not something which stands still. Thus "old styles come under increasing strain, new speech needs to be generated". He sees orthodoxy as a number of "dialogues": a constant dialogue with Christ, crucified and risen; but also that of the community of faith with the world – "a risky enterprise", as he writes. "We ought to be puzzled", he says, "when the world is not challenged by the gospel." It may mean that Christians have not understood the kinds of bondage to which the gospel is addressed. He has also written that "orthodoxy is inseparable from sacramental practice... The eucharist is the paradigm of that dialogue which is 'orthodoxy'". This stance may help to explain both his social radicalism and his view of the importance of the Church, and thus of the holding together of the Anglican communion over matters such as homosexuality: his belief in the idea of the Church is profound.

His interest in and involvement with social issues is longstanding. While chaplain of Clare College, Cambridge, Williams took part in anti-nuclear demonstrations at United States bases. In 1985, he was arrested for singing psalms as part of a protest organised by the Campaign for Nuclear Disarmament at Lakenheath, an American air base in Suffolk; his fine was paid by his college. At this time he was a member of the left-wing Anglo-Catholic Jubilee Group headed by Kenneth Leech and he collaborated with Leech in a number of publications including the anthology of essays to commemorate the 150th anniversary of the Oxford Movement entitled Essays Catholic and Radical in 1983.

Williams' contributions to Anglican views of homosexuality were perceived as quite liberal before he became the Archbishop of Canterbury. These views are evident in a paper written by Williams called "The Body's Grace", which he originally delivered as the 10th Michael Harding Memorial Address in 1989 to the Lesbian and Gay Christian Movement, and which is now part of a series of essays collected in the book Theology and Sexuality (ed. Eugene Rogers, Blackwells 2002). At the Lambeth Conference in July 1998, then Bishop Rowan Williams of Monmouth abstained and did not vote in favour of the conservative resolution on human sexuality. These actions, combined with his initial support for openly gay Canon Jeffrey John, gained him support among liberals and caused frustration for conservatives.

In 1991 Williams was elected as Bishop of Monmouth in the Church in Wales and was consecrated on 1 May 1992. He continued to serve as Bishop of Monmouth after he was promoted to be the Archbishop of Wales in 1999. In 2002 he was announced as the successor to George Carey as Archbishop of Canterbury – the senior bishop in the Church of England and the Anglican Communion. As a bishop of the disestablished Church in Wales, Williams was the first Archbishop of Canterbury since the English Reformation to be appointed to this office from outside the Church of England. His election by the Chapter of Canterbury Cathedral was confirmed by nine bishops in the customary ceremony in London on 2 December 2002, when he officially became Archbishop of Canterbury. He was enthroned on 27 February 2003 as the 104th Archbishop of Canterbury.

He was in New York at the time of 11 September 2001 attacks, only yards from Ground Zero delivering a lecture; he subsequently wrote a short book, Writing in the Dust, offering reflections on the event. In reference to Al Qaeda, he said that terrorists "can have serious moral goals" and that "Bombast about evil individuals doesn't help in understanding anything." He subsequently worked with Muslim Leaders in England and on the third anniversary of 9/11 spoke, by invitation, at the Al-Azhar University Institute in Cairo on the subject of the Trinity. He stated that the followers of the will of God should not be led into ways of violence. He contributed to the debate prior to the 2005 United Kingdom general election criticising assertions that immigration was a cause of crime. Williams has argued that the partial adoption of Islamic sharia law in the United Kingdom is "unavoidable" as a method of arbitration in such affairs as marriage, and should not be resisted.

In 2002 Williams delivered the Richard Dimbleby lecture and chose to talk about the problematic nature of the nation-state but also of its successors. He cited the "market state" as offering an inadequate vision of the way a state should operate, partly because it was liable to short-term and narrowed concerns (thus rendering it incapable of dealing with, for instance, issues relating to the degradation of the natural environment) and partly because a public arena which had become value-free was liable to disappear amidst the multitude of competing private interests. (He noted the same moral vacuum in British society after this visit to China in 2006.) He is not uncritical of communitarianism, but his reservations about consumerism have been a constant theme. These views have often been expressed in quite strong terms; for Example, he once commented that "Every transaction in the developed economies of the West can be interpreted as an act of aggression against the economic losers in the worldwide game."

In 2003, in an attempt to encourage dialogue, Williams appointed Robin Eames, Archbishop of Armagh and Primate of All Ireland, as chairman of the Lambeth Commission on Communion, to examine the challenges to the unity of the Anglican Communion, stemming from the consecration of Gene Robinson as Bishop of New Hampshire, and the blessing of same-sex unions in the Diocese of New Westminster. (Robinson was in a same-sex relationship.) The Windsor Report, as it was called, was published in October 2004. It recommended solidifying the connection between the churches of the communion by having each church ratify an "Anglican Covenant" that would commit them to consulting the wider communion when making major decisions. It also urged those who had contributed to disunity to express their regret.

Williams was to repeat his opposition to American action in October 2002 when he signed a petition against the Iraq War as being against United Nations (UN) ethics and Christian teaching, and "lowering the threshold of war unacceptably". Again on 30 June 2004, together with the Archbishop of York, David Hope, and on behalf of all 114 Church of England bishops, he wrote to Tony Blair expressing deep concern about UK government policy and criticising the coalition troops' conduct in Iraq. The letter cited the abuse of Iraqi detainees, which was described as having been "deeply damaging" – and stated that the government's apparent double standards "diminish the credibility of western governments". In December 2006 he expressed doubts in an interview on the Today programme on BBC Radio 4 about whether he had done enough to oppose the war.

In November 2005, following a meeting of Anglicans of the "global south" in Cairo at which Williams had addressed them in conciliatory terms, 12 primates who had been present sent him a letter sharply criticising his leadership which said that "We are troubled by your reluctance to use your moral authority to challenge the Episcopal Church and the Anglican Church of Canada." The letter acknowledged his eloquence but strongly criticised his reluctance to take sides in the communion's theological crisis and urged him to make explicit threats to those more liberal churches. Questions were later asked about the authority and provenance of the letter as two additional signatories' names had been added although they had left the meeting before it was produced. Subsequently, the Church of Nigeria appointed an American cleric to deal with relations between the United States and Nigerian churches outside the normal channels. Williams expressed his reservations about this to the General Synod of the Church of England.

In November 2007, Williams gave an interview for Emel magazine, a British Muslim magazine. Williams condemned the United States and certain Christian groups for their role in the Middle East, while his criticism of some trends within Islam went largely unreported. As reported by The Times, he was greatly critical of the United States, the Iraq war, and Christian Zionists, yet made "only mild criticisms of the Islamic world". He claimed "the United States wields its power in a way that is worse than Britain during its imperial heyday". He compared Muslims in Britain to the Good Samaritans, praised Muslim salat ritual of five prayers a day, but said in Muslim nations, the "present political solutions aren't always very impressive".

Williams's position received more support from the legal community, following a speech given on 4 July 2008 by Nicholas Phillips, Lord Chief Justice of England and Wales. He supported the idea that sharia could be reasonably employed as a basis for "mediation or other forms of alternative dispute resolution". He went further to defend the position Williams had taken earlier in the year, explaining that "It was not very radical to advocate embracing sharia law in the context of family disputes, for Example, and our system already goes a long way towards accommodating the archbishop's suggestion."; and that "It is possible in this country for those who are entering into a contractual agreement to agree that the agreement shall be governed by a law other than English law." However, some concerns have been raised over the question of how far "embracing" sharia law would be compliant with the UK's obligation under human rights law.

Williams said in April 2010 that the child sexual abuse scandal in the Roman Catholic Church in Ireland had been a "colossal trauma" for Ireland in particular. His remarks were condemned by the second most senior Catholic bishop in Ireland, the Archbishop of Dublin, Diarmuid Martin, who said that "Those working for renewal in the Catholic Church in Ireland did not need this comment on this Easter weekend and do not deserve it."

On 8 June 2011 Williams said that the British government was committing Britain to "radical, long-term policies for which no-one voted". Writing in the New Statesman magazine, Williams raised concerns about the coalition's health, education and welfare reforms. He said there was "indignation" due to a lack of "proper public argument". He also said that the "Big Society" idea was viewed with "widespread suspicion", noting also that "we are still waiting for a full and robust account of what the Left would do differently and what a Left-inspired version of localism would look like". The article also said there was concern that the government would abandon its responsibility for tackling child poverty, illiteracy and poor access to the best schools. He also expressed concern about the "quiet resurgence of the seductive language of 'deserving' and 'undeserving' poor" and the steady pressure to increase "what look like punitive responses to alleged abuses of the system". In response, David Cameron said that he "profoundly disagreed" with Williams's claim that the government was forcing through "radical policies for which no one voted". Cameron said that the government was acting in a "good and moral" fashion and defended the "Big Society" and the coalition's deficit reduction, welfare and education plans. "I am absolutely convinced that our policies are about actually giving people a greater responsibility and greater chances in their life, and I will defend those very vigorously", he said. "By all means let us have a robust debate but I can tell you, it will always be a two-sided debate."

Williams stood down as Archbishop of Canterbury on 31 December 2012 to take up the position of Master of Magdalene College at Cambridge University in January 2013. Later in 2013 he was appointed Chancellor of the University of South Wales. He also delivered the Gifford Lectures at the University of Edinburgh in 2013. Justin Welby succeeded him in the chair of St Augustine on 9 November 2012, being enthroned in March 2013. On 26 December 2012, 10 Downing St announced Williams' elevation to the peerage as a Life Baron, so that he could continue to speak in the Upper House of Parliament. Following the creation of his title on 8 January and its gazetting on 11 January 2013, he was introduced to the temporal benches of the House of Lords as Baron Williams of Oystermouth on 15 January 2013, sitting as a crossbencher.

On 26 November 2013, at Clare College, Cambridge, Williams gave the annual T. S. Eliot Lecture, with the title Eliot's Christian Society and the Current Political Crisis. In this, he recalled the poet's assertion that a competent agnostic would make a better prime minister than an incompetent Christian. "I don't know what he would make of our present prime minister", he said. "I have a suspicion that he might have approved of him. I don't find that a very comfortable thought."

In March 2014 the Law Society of England and Wales issued instructions on how to draft sharia-compliant wills for the network of sharia courts which has grown up in Islamic communities to deal with disputes between Muslim families, and so Williams' idea of sharia in the UK was, for a time, seen to bear fruit. The instructions were withdrawn in November 2014.

In 2015 it was reported that Williams had written a play called Shakeshafte, about a meeting between william Shakespeare and Edmund Campion, a Jesuit priest and martyr. Williams suspects that Shakespeare was Catholic, though not a regular churchgoer. The play took to the stage in July 2016, and was received favourably.

In August 2017 Williams condemned antisemitism and backed a petition to remove the works of David Irving and other Holocaust denial books from the University of Manchester. In a letter to the university, Williams said "At a time when there is, nationally and internationally, a measurable rise in the expression of extremist views I believe this question needs urgent attention."

Williams also said that "it may be that the covenant creates a situation in which there are different levels of relationship between those claiming the name of Anglican. I don’t at all want or relish this, but suspect that, without a major change of heart all round, it may be an unavoidable aspect of limiting the damage we are already doing to ourselves." In such a structure, some churches would be given full membership of the Anglican Communion, while others had a lower-level form of membership, with no more than observer status on some issues. Williams also used his keynote address to issue a profound apology for the way that he had spoken about "exemplary and sacrificial" gay Anglican Priests in the past. "There are ways of speaking about the question that seem to ignore these human realities or to undervalue them," he said. "I have been criticised for doing just this, and I am profoundly sorry for the carelessness that could give such an impression."