Holloway's paternal grandfather, Augustus Holloway (1829–1884), an orphan, was brought up by John Stone, a sailmaker, and his wife Mary, in Poole, Dorset. Augustus became a wealthy shopkeeper, running his own brush-making Business. He married Amelia Catherine Knight in September 1856, and they had three children, Maria, Charles and George.

Holloway was born in Manor Park, Essex (now in the London Borough of Newham), the younger child and only son of George Augustus Holloway (1860–1919), a lawyer's clerk, and Florence May née Bell (1862–1913), a housekeeper and dressmaker. He was named after Henry Morton Stanley, the Journalist and Explorer famous for his exploration of Africa and for his search for David Livingstone. There were theatrical connections in the Holloway family going back to Charles Bernard (1830–1894), an actor and theatre manager, who was the brother of Holloway's maternal grandmother.

In the early 1880s the family moved to Poplar, London. When Augustus died, George Holloway (Stanley's father) moved to nearby Manor Park and became a clerk for a city Lawyer, Robert Bell. George married Bell's daughter Florence in 1884, and they had two children, Millie (1887–1949) and Stanley. George left Florence in 1905 and was never seen or heard from again by his family.

Holloway's stage career began in 1910, when he travelled to Walton-on-the-Naze to audition for The White Coons Show, a concert party variety show arranged and produced by Will C. Pepper, father of Harry S. Pepper, with whom Holloway later starred in The Co-Optimists. This seaside show lasted six weeks.

Holloway was married twice, first to Alice "Queenie" Foran. They met in June 1913 in Clacton, while he was performing in a concert party and she was selling charity flags on behalf of the Royal National Lifeboat Institution. Queenie was orphaned at the age of 16, something that Holloway felt he and Queenie had in Common, as his mother had died that year and his father had earlier abandoned the family. He married Queenie in November 1913.

Holloway and Queenie had four children: Joan, born on Holloway's 24th birthday in 1914, Patricia (b. 1920), John (1925–2013) and Mary (b. 1928). Upon the death of her mother, Queenie inherited some property in Southampton Row and relied on the rents from the property for her income. During the First World War, while Holloway was away fighting in France, Queenie began to have financial trouble, as the tenants failed to pay their rent. Out of desperation, she approached several loan sharks, incurring a huge debt about which Holloway knew nothing. She also started to drink heavily as the pressures from the war and of supporting her daughter took their toll. On Holloway's return from the war, the debt was paid off and they moved to Hampstead, West London. By the late 1920s, Holloway found himself in financial difficulties with the British tax authorities and was briefly declared bankrupt. In the 1930s, Holloway and Queenie moved to Bayswater and remained there until Queenie's death in 1937 at the age of 45, from cirrhosis of the liver. Of the children from this first marriage, John worked as an Engineer in an electrics company, and Mary worked for British Petroleum for many years.

After relinquishing his army commission in May 1919, Holloway returned to London and resumed his singing and acting career, finding success in two West End musicals at the Winter Garden Theatre. Later that month, he created the role of Captain Wentworth in Guy Bolton and P. G. Wodehouse's Kissing Time, followed in 1920 by the role of René in A Night Out. Following its provincial success, The Disorderly Room was given a West End production at the Victoria Palace Theatre in late 1919, in which Holloway starred alongside Henson and Tom Walls. Holloway made his film debut in a 1921 silent comedy called The Rotters.

From June 1921, Holloway had considerable success in The Co-Optimists, a concert party formed with performers whom he had met during the war in France, which The Times called "an all-star 'pierrot' entertainment in the West-end." It opened at the small Royalty Theatre and soon transferred to the much larger Palace Theatre, where the initial version of the show ran for over a year, giving more than 500 performances. The entertainment was completely rewritten at regular intervals to keep it fresh, and the final edition, beginning in November 1926, was the 13th version. The Co-Optimists closed in 1927 at His Majesty's Theatre after 1,568 performances over eight years. In 1929, a feature film version was made, with Holloway rejoining his former co-stars.

In 1923 Holloway established himself as a BBC Radio performer. The early BBC broadcasts brought variety and classical artists together, and Holloway could be heard in the same programme as the Cellist John Barbirolli or the Band of the Scots Guards. He developed his solo act throughout the 1920s while continuing his involvement with the musical theatre and The Co-Optimists. In 1924 he made his first gramophone discs, recording for HMV two songs from The Co-Optimists: "London Town" and "Memory Street". After The Co-Optimists disbanded in 1927, Holloway played at the London Hippodrome in Vincent Youmans's musical comedy Hit the Deck as Bill Smith, a performance judged by The Times to be "invested with many shrewd touches of humanity". In The Manchester Guardian, Ivor Brown praised him for a singing style "which coaxes the ear rather than clubbing the head."

Holloway had a 54-year recording career, beginning in the age of acoustic recording, and ending in the era of the stereophonic LP. He mainly recorded songs from musicals and revues, and he recited many monologues on various subjects. Most prominent among his recordings (aside from his participation in recordings of My Fair Lady) are those of three series of monologues that he made at intervals throughout his career. They featured Sam Small, Albert Ramsbottom, and historical events such as the Battle of Hastings, Magna Carta and the Battle of Trafalgar. In all, his discography runs to 130 recordings, spanning the period 1924 to 1978. A review in The Gramophone of one of his 1957 albums containing recordings of his old "concert party" songs commented, "what a fine voice he has and how well he can use it – diction, phrasing, range and the interpretative insight of the artist".

Holloway began regularly performing monologues, both on stage and on record, in 1928, with his own creation, Sam Small, in Sam, Sam, Pick oop thy Musket. Over the following years, he recorded more than 20 monologues based around the character, most of which he wrote himself. He created Sam Small after Henson had returned from a tour of northern England and told him a story about an insubordinate old soldier from the Battle of Waterloo. Holloway developed the character, naming him after a Cockney friend of Henson called Annie Small; the name Sam was chosen at random. Holloway adopted a northern accent for the character. The Times commented, "For absolute delight ... there is nothing to compare with Mr. Stanley Holloway's monologue, concerning a military contretemps on the eve of Waterloo ... perfect, even to the curled moustache and the Lancashire accent of the stubborn Guardsman hero."

In 1929 Holloway played another leading role in musical comedy, Lieutenant Richard Manners in Song of the Sea, and later that year he performed in the revue Coo-ee, with Billy Bennett, Dorothy Dickson and Claude Hulbert. When The Co-Optimists re-formed in 1930, he rejoined that company, now at the Savoy Theatre, and at the same venue appeared in Savoy Follies in 1931, where he introduced to London audiences the monologue The Lion and Albert. The monologue was written by Marriott Edgar, who based the story on a news item about a boy who was eaten by a lion in the zoo. In the monologue, Mr. and Mrs. Ramsbottom react in a measured way when their son Albert is swallowed. Neither Edgar nor Holloway was convinced that the piece would succeed, but needing material for an appearance at a Northern Rugby League dinner Holloway decided to perform it. It was well received, and Holloway introduced it into his stage act. Subsequently, Edgar wrote 16 monologues for him. In its obituary of Holloway, The Times wrote that Sam and Albert "became part of English folklore during the 1930s, and they remained so during the Second World War." These monologues employed the Holloway style that has been called "the understated look-on-the-bright-side world of the cockney working class. ... Holloway's characters are [mischievous, like Albert, or] obstinate, and hilariously clueless. He often told his stories in costume; sporting outrageous attire and bushy moustaches." In 1932 Harry S. Pepper, with Holloway and others, revived the White Coons Concert Party show for BBC Radio.

Beginning in 1934, Holloway appeared in a series of British films, three of which featured his creation Sam Small. He started his association with the filmmakers Ealing Studios in 1934, appearing in the fifth Gracie Fields picture Sing As We Go. His other films from the 1930s included Squibs (1935) and The Vicar of Bray (1937). In December 1934, Holloway made his first appearance in pantomime, playing Abanazar in Aladdin. In his first season in the part, he was overshadowed by his co-star, Sir Henry Lytton, as the Emperor, but he quickly became established as a favourite in his role, playing it in successive years in Leeds, London, Edinburgh and Manchester.

On 2 January 1939, Holloway married a 25-year-old Actress and former chorus Dancer named Violet Marion Lane (1913–1997) and they moved to Marylebone. Violet was born into a working-class family from Leeds. Her mother was Scottish, and her civil Engineer father, Alfred Lane, was a Yorkshireman. Holloway's second marriage lasted over 40 years until his death in 1982. Although he was a client of the Aza Agency in London, Violet effectively managed Holloway's career, and no project was taken on without her approval. In his autobiography, Holloway said of her, "I suppose I am committing lawful bigamy. Not only is she my wife, lover, mother, cook, chauffeuse, private secretary, house keeper, hostess, electrician, Business manager, critic, handy woman, she is also my best friend." Together, they had one son, Julian, who also became an actor and is best known for appearing in the Carry On films. Julian had a brief relationship with Patricia Neal's daughter Tessa Dahl which produced a daughter, the model and author Sophie Dahl.

On stage during the war years, Holloway appeared in revues, first Up and Doing, with Henson, Binnie Hale and Cyril Ritchard in 1940 and 1941, and then Fine and Dandy, with Henson, Dorothy Dickson, Douglas Byng and Graham Payn. In both shows, Holloway presented new monologues, and The Times thought a highlight of Fine and Dandy was a parody of the BBC radio programme The Brains Trust, with Holloway "ponderously anecdotal" and Henson "gigglingly omniscient".

In 1941 Holloway took a character part in Gabriel Pascal's film of Bernard Shaw's Major Barbara, in which he played a policeman. He had leading parts in later films, including The Way Ahead (1944), This Happy Breed (1944) and The Way to the Stars (1945). After the war, he played Albert Godby in Brief Encounter and had a cameo role as the First Gravedigger in Laurence Olivier's 1948 film of Hamlet. In 1951 Holloway played the same role on the stage to the Hamlet of Alec Guinness. For Pathé News, he delivered the commentary for documentaries in a series called Time To Remember, where he narrated over old newsreels from significant dates in history from 1915 to 1942. Holloway also starred in a series of films for Ealing Studios, beginning with Champagne Charlie in 1944 alongside Tommy Trinder. After that he made Nicholas Nickleby (1947) and Another Shore (1948). He next appeared in three of the most famous Ealing Comedies, Passport to Pimlico (1949), The Lavender Hill Mob (1951) and The Titfield Thunderbolt (1953). His final film with the studio was Meet Mr. Lucifer (1953).

In 1948 Holloway conducted a six-month tour of Australia and New Zealand and supported by the band leader Billy Mayerl. He made his Australian début at The Tivoli Theatre, Melbourne, and recorded television appearances to publicise the forthcoming release of Passport to Pimlico. Holloway wrote the monologue Albert Down Under especially for the tour.

In 1954 Holloway joined the Old Vic theatre company to play Bottom in A Midsummer Night's Dream, with Robert Helpmann as Oberon and Moira Shearer as Titania. After playing at the Edinburgh Festival, the Royal Shakespeare Company took the production to New York, where it played at the Metropolitan Opera House and then on tour of the US and Canada. The production was harshly reviewed by critics on both sides of the Atlantic, but Holloway made a strong impression. Holloway said of the experience: "Out of the blue I was asked by the Royal Shakespeare Company to tour America with them, playing Bottom. ... From that American tour came the part of Alfred Doolittle in My Fair Lady and from then on, well, just let's say I was able to pick and choose my parts and that was very pleasant at my age." Holloway's film career continued simultaneously with his stage work; one Example was the 1956 comedy Jumping for Joy. American audiences became familiar with his earlier film roles when the films began to be broadcast on television in the 1950s.

In 1956 Holloway created the role of Alfred P. Doolittle in the original Broadway production of My Fair Lady. The librettist, Alan Jay Lerner, remembered in his memoirs that Holloway was his first choice for the role, even before it was written. Lerner's only concern was whether, after so long away from the musical stage, Holloway still had his resonant singing voice. Holloway reassured him over a lunch at Claridge's: Lerner recalled, "He put down his knife and fork, threw back his head and unleashed a strong baritone note that resounded through the dining room, drowned out the string quartet and sent a few dozen people off to the osteopath to have their necks untwisted." Holloway had a long association with the show, appearing in the original 1956 Broadway production at the Mark Hellinger Theatre, the 1958 London version at the Theatre Royal, Drury Lane, and the film version in 1964, which he undertook instead of the role of Admiral Bloom in Mary Poppins that he had been offered the same year. In The Manchester Guardian, Alistair Cooke wrote, "Stanley Holloway distils into the body of Doolittle the taste and smell of every pub in England." Also in 1964, he appeared as Bellomy in the Hallmark Hall of Fame television production of The Fantasticks.

Holloway was appointed an Officer of the Order of the British Empire (OBE) in the 1960 New Year Honours for his services to entertainment. In 1978 he was honoured with a special award by the Variety Club of Great Britain.

In 1962 Holloway played the role of an English butler called Higgins in a US television sitcom called Our Man Higgins. It ran for only a season. His son Julian also appeared in the series. In 1964 he again appeared on stage in Philadelphia in Cool Off!, a short-lived Faustian spoof. He returned to the US a few more times after that to take part in The Dean Martin Show three times and The Red Skelton Show twice. He also appeared in the 1965 war film In Harm's Way, together with John Wayne and Kirk Douglas.

Holloway entitled his autobiography Wiv a Little Bit o' Luck after the song he performed in My Fair Lady. The book was ghostwritten by the Writer and Director Dick Richards and published in 1967. Holloway oversaw the publication of three volumes of the monologues by or associated with him: Monologues (1979); The Stanley Holloway Monologues (1980); and More Monologues (1981).

In 1970, Holloway began an association with the Shaw Festival in Canada, playing Burgess in Candida. He made what he considered his West End debut as a straight actor in Siege by David Ambrose at the Cambridge Theatre in 1972, co-starring with Alastair Sim and Michael Bryant. He returned to Shaw and Canada, playing the central character Walter/William in You Never Can Tell in 1973.

Holloway continued to perform until well into his eighties, touring Asia and Australia in 1977 together with Douglas Fairbanks, Jr. and David Langton in The Pleasure of His Company, by Samuel A. Taylor and Cornelia Otis Skinner. He made his last appearance performing at the Royal Variety Performance at the London Palladium in 1980, aged 89.

Holloway died of a stroke at the Nightingale Nursing Home in Littlehampton, West Sussex, on 30 January 1982, aged 91. He is buried, along with his wife Violet, at St Mary the Virgin Church in East Preston, West Sussex.

Looking back in 2004, Holloway's biographer Eric Midwinter wrote, "With his cockney authenticity, his splendid baritone voice, and his wealth of comedy experience, he made a great success of this role, and, as he said, it put him 'bang on top of the heap, in demand' again at a time when, in his mid-sixties, his career was beginning to wane". His performances earned him a Tony Award nomination for Best Featured Actor in a Musical and an Academy Award nomination for Best Actor in a Supporting Role. Following his success on Broadway, Holloway played Pooh-Bah in a 1960 US television Bell Telephone Hour production of The Mikado, produced by the veteran Gilbert and Sullivan performer Martyn Green. Holloway appeared with Groucho Marx and Helen Traubel of the Metropolitan Opera. His notable films around this time included Alive and Kicking in 1959, co-starring Sybil Thorndike and Kathleen Harrison, and No Love for Johnnie in 1961 opposite Peter Finch. In 1962, Holloway took part in a studio recording of Oliver! with Alma Cogan and Violet Carson, in which he played Fagin.

There is a memorial plaque dedicated to Holloway in St Paul's, Covent Garden, London, which is known as "the actors' church". The plaque is next to a memorial to Gracie Fields. In 2009 English Heritage unveiled a blue plaque at 25 Albany Road, Manor Park, Essex, the house in which he was born in 1890. There is a building named after him at 2 Coolfin Road, Newham, London, called Stanley Holloway Court.

During his early teenage years, Holloway attended the Worshipful School of Carpenters in nearby Stratford and joined a local choir, which he later called his "big moment". He left school at the age of 14 and worked as a junior clerk in a boot Polish factory, where he earned ten shillings a week. He began performing part-time as Master Stanley Holloway – The Wonderful Boy Soprano from 1904, singing sentimental songs such as "The Lost Chord". A year later, he became a clerk at Billingsgate Fish Market, where he remained for two years before commencing training as an infantry soldier in the London Rifle Brigade in 1907.