Bulger's father, James Joseph Bulger Sr., was from Harbour Grace, Newfoundland. After settling in Everett, Massachusetts, James Sr. married Jane Veronica "Jean" McCarthy, a first-generation Irish immigrant. Their first child, James Joseph Bulger, Jr., was born in 1929.

Bulger has two younger brothers, william "Billy" Michael Bulger (born 1934) and John P. Bulger (born 1938).

The elder Bulger worked as a union laborer and occasional longshoreman; he lost his arm in an industrial accident and the family was reduced to poverty. In May 1938, the Mary Ellen McCormack Housing Project was opened in the neighborhood of South Boston. The Bulger family moved in and the children grew up there. The other Bulger children, william Michael and John P. Bulger, excelled at school; James Bulger Jr. became drawn into street life.

Bulger developed a reputation as a thief and street fighter fiercely loyal to South Boston. This led to his meeting more experienced Criminals and finding more lucrative opportunities. In 1943, fourteen-year-old Bulger was arrested and charged with larceny. By then he had joined a street gang known as the "Shamrocks" and would eventually be arrested for assault, forgery and armed robbery. He was sentenced to a Juvenile reformatory for these crimes.

Shortly after his release in April 1948, Bulger joined the U.S. Air Force, where his character continued to show. After his basic training, he was stationed as an aircraft mechanic, first at the Smoky Hill Air Force Base in Salina, Kansas, then in Idaho. He spent time in the stockade for several assaults. He was later arrested by Air Force police in 1950 for going absent without leave. Nevertheless, he received an honorable discharge in 1952 and returned to Massachusetts.

Bulger's companion during his years as a fugitive was his longtime girlfriend Catherine Greig [born (1951-04-03) 3 April 1951 (age 67)], who is almost 22 years younger than Bulger. Greig grew up in Boston and had an identical twin sister, Margaret, and a younger brother, David. Their father was a machinist from Glasgow, Scotland, and their mother was from Canada.

In 1956, Bulger served his first term in federal prison when he was sentenced to time in Atlanta Penitentiary for armed robbery and truck hijacking. He later told mobster Kevin Weeks that while there, he was involved in the MK-ULTRA program, the goal of which was to research mind control drugs for the CIA. For eighteen months, Bulger and eighteen other inmates, all of whom had volunteered in return for reduced sentences, were given LSD and other drugs. Bulger later complained that they had been "recruited by deception" and were told they were helping to find "a cure for schizophrenia". He described his experience as "nightmarish" and said it took him "to the depths of insanity."

Bulger was transferred from Atlanta to Alcatraz Federal Penitentiary, arriving on November 2, 1959, as prisoner #AZ1428. He became a close friend of fellow inmate Clarence Carnes, a.k.a. "The Choctaw Kid". In November 1962, he was transferred to Leavenworth Federal Penitentiary and, in 1963, to Lewisburg Federal Penitentiary. Bulger's third petition for parole, in 1965, was granted after he had served nine years in prison. He would not be arrested again, let alone spend a day in jail, for 46 years.

Bulger fathered one child, Douglas Glenn Cyr (1967–1973), during a 12-year common-law marriage with Lindsey Cyr, a waitress and former fashion model living in North Weymouth, Massachusetts. Bulger and Cyr began living together in 1966, when Cyr was 21 and a waitress at a North Quincy cafe. According to Cyr, "He used to say that there were four people he would turn up on a street corner for: Douglas, me, Billy, or his mother. And we all made him vulnerable." At six years of age, Douglas died from Reye syndrome after having a severe allergic reaction to an aspirin injection.

At about age 20, Greig married Robert "Bobby" McGonagle of South Boston, a Boston firefighter. He was from a family that led the Mullen Gang and was injured during a mob gunfight in 1969. Before his 1987 drug overdose death, Bobby McGonagle reportedly held Bulger responsible for the murders of his brothers. Twins Donald McGonagle and Paul McGonagle were killed during fighting between the Mullen and Killeen Gangs. The body of Paul McGonagle lay hidden and buried for 25 years on Tenean Beach in Dorchester. Greig's twin sister Margaret is the widow of Paul McGonagle. Greig's younger brother David Greig was a close associate of Bulger. David was found shot dead on Cape Cod, a death characterized as a suicide.

In 1971, the FBI approached Bulger and attempted to recruit him as an informant as part of their effort against the Patriarca family. FBI Special Agent Dennis Condon was assigned to make the pitch. However, Condon failed to win Bulger's trust. Three years later, Bulger partnered with Flemmi, an Italian-American mobster who had been an FBI informant since 1965. Although it is a documented fact that Bulger soon followed Flemmi's Example, exactly how and why continues to be debated. Special Agent John Connolly frequently boasted to his fellow agents about how he had recruited Bulger at a late-night meeting at Wollaston Beach inside an FBI-issue car. Connolly allegedly said that the Bureau could help in Bulger's feud with Patriarca underboss Gennaro Angiulo. After listening to the pitch, Bulger is said to have responded, "Alright, if they want to play checkers, we'll play chess. Fuck 'em."

After the 1972 truce, Bulger and the Mullens were in control of South Boston's Criminal underworld. FBI Special Agent Condon noted in his log in September 1973 that Bulger and Nee had been heavily shaking down the neighborhood's bookmakers and loan sharks. Over the years that followed, Bulger began to remove opposition by persuading Winter to sanction the killings of those who "stepped out of line." In a 2004 interview, Winter recalled that the highly intelligent Bulger "could teach the devil tricks." During this era, Bulger's victims included Mullen Gang veterans McGonagle, King, and Spike O'Toole.

Authorities received a tip from a woman in Iceland that Bulger was living in an apartment near a beach in Santa Monica. The Boston Globe identified the tipster as Anna Björnsdóttir, a former model, Actress, and Miss Iceland 1974, who lived in Bulger's neighborhood. A day later, "using a ruse, agents and other task force members lured Mr. Bulger out of his apartment", "arrested him 'without incident', then went in the house and arrested Greig". Bulger was charged with murder, "conspiracy to commit murder, extortion, narcotics distribution and money-laundering". Agents found "more than $800,000 in cash, 30 firearms, and fake IDs" at the apartment. Carmen Ortiz, U.S. attorney for the District of Massachusetts, said "she believes the death penalty is not an option in the federal charges Bulger faces in her district, but that he could face the death penalty for two cases outside the district". In Oklahoma, where Bulger is alleged to have ordered the killing of businessman Roger Wheeler Sr., in 1981, Tulsa County District Attorney Tim Harris said, "It is our intention to bring Bulger to justice and to be held accountable for the murder of Mr. Wheeler". In Florida, Miami-Dade State Attorney Katherine Fernandez Rundle said, "After a 16-year delay, I will be working to ensure that a Miami jury has the opportunity to look [Bulger] in the eyes and determine his fate".

FBI Agent John Morris was put in charge of the Organized Crime Squad at the Bureau's Boston field office in December 1977. Morris not only proved himself unable to rein in Connolly's protection of Bulger, but even began assisting him. By 1982, Morris was "thoroughly compromised", having had Bulger buy plane tickets for his then-girlfriend Debbie Noseworthy to visit him in Georgia while he was being trained for drug investigations. Even after 1983, when he was transferred to head up the Boston FBI's drug task force, Morris remained an accomplice to Connolly and Bulger.

In February 1979, federal prosecutors indicted numerous members of the Winter Hill Gang, including boss Howie Winter, for fixing horse races. Bulger and Flemmi were originally going to be part of this indictment, but Connolly and Morris were able to persuade prosecutor Jeremiah T. O'Sullivan to drop the charges against them at the last minute. Bulger and Flemmi were instead named as unindicted co-conspirators.

According to Weeks' memoirs, in 1980 Boston Herald reporter Paul Corsetti began researching an article about Louis Litif's murder and Bulger's suspected involvement. After reporting the story for several days, Corsetti was approached by a man who said, "I'm Jim Bulger and if you continue to write shit about me, I'm going to blow your fucking head off." Corsetti sought help from the Patriarca crime family, but they said that Bulger was outside their control. "The next day, Corsetti reported the meeting to the Boston police. He was issued a pistol permit within 24 hours. The cop who gave him the permit told him, 'I'm glad my last name is not Corsetti.' A couple days later Jimmy told me about the scene with the cop and was glad to hear how uncomfortable he had made Corsetti."

In 1982, a South Boston cocaine dealer named Edward Brian Halloran, known on the streets as "Balloonhead", approached the FBI and stated that he had witnessed Bulger and Flemmi murdering Litif. Meanwhile, Connolly kept Bulger and Flemmi closely briefed on what Halloran was saying to the FBI, specifically his knowledge of their participation in the murder of Tulsa, Oklahoma businessman Roger Wheeler. Connolly reported that Halloran was shopping this information to the FBI for a chance for he and his family to be placed in the Witness Protection Program. Soon after, on May 11, 1982, Bulger, Flemmi, and Weeks were tipped off that Halloran had returned to South Boston.

On September 13, 1984, Bulger, Weeks and Nee supervised the loading of the Valhalla. The final cache included "91 rifles, 8 submachine guns, 13 shotguns, 51 handguns, 11 bulletproof vests, 70,000 rounds of ammunition, plus an array of hand grenades and rocket heads." The Valhalla rendezvoused 120 miles off the Irish west coast with the Marita Ann, an IRA ship that had sailed from Tralee. During the return voyage, the Irish Navy stopped the Marita Ann and seized the hidden arsenal, arresting IRA members Martin Ferris, Mike Browne and John Crawley. The operation had been compromised by IRA informant Sean O'Callaghan.

Bulger and Flemmi then took over the remnants of the Winter Hill Gang and used their status as informants to eliminate competition. The information they supplied to the FBI in subsequent years was responsible for the imprisonment of several of Bulger's associates whom Bulger viewed as threats; however, the main victim of their relationship with the federal government was the Patriarca family, which was based in Boston's North End, and in Federal Hill, Providence, Rhode Island. After the 1986 RICO indictment of Angiulo and his associates, the Patriarca family's Boston operations were in a shambles. Bulger and Flemmi stepped into the ensuing vacuum to take control of organized crime in the Boston area.

In 1990 "Red" Shea and his associates were arrested as part of a joint investigation involving the Drug Enforcement Administration (DEA), the Boston Police Department and the Massachusetts State Police. All refused to testify against Bulger, Flemmi and Weeks. According to Weeks:

In the summer of 1991 Bulger and Kevin Weeks, along with associates Patrick and Michael Linskey, came into possession of the winning Massachusetts Lottery ticket, which had been bought at a store he owned. The four men shared a prize of around US$14 million. Bulger was widely thought to have obtained his share of the jackpot illegitimately.

He had also set up safe deposit boxes, containing cash, jewelry and passports, in locations across North America and Europe, including Florida, Oklahoma, Montreal, Dublin, London, Birmingham and Venice. In December 1994 he was informed by retired FBI Agent John Connolly that sealed indictments had come from the Department of Justice and that the FBI was set to make arrests during the Christmas season. In response, Bulger fled Boston on December 23, 1994, accompanied by his common-law wife Theresa Stanley.

In mid-November 1995 Weeks and Bulger met for the last time, at the lion statues at the front of the New York Public Library, and adjourned for dinner at a nearby restaurant. According to Weeks:

Federal judge Mark L. Wolf granted Cardinale's motion on May 22, 1997. On June 3, Paul E. Coffey, the head of the Organized Crime and Racketeering Section of the Justice Department, gave a sworn statement admitting that Bulger had been an FBI informant. Coffey stated that since Bulger was accused of "leading a Criminal enterprise" while working as an informant and was also now a fugitive, he had "forfeited any reasonable expectation" that his identity would be protected.

Greig had been wanted by the FBI since 1999. The Criminal complaint against her alleges that she harbored a fugitive, Whitey Bulger. She was represented in the Criminal proceedings by the prominent Criminal attorney Kevin Reddington of Brockton, Massachusetts. After being captured alongside Bulger, Greig sought release on bail and home confinement, a request that was denied.

In December 2002, william Bulger appeared before the House Committee on Oversight and Government Reform and refused to testify, citing his Fifth Amendment right against self-incrimination. In April 2003, the committee voted "to grant william Bulger immunity to obtain information concerning Whitey's whereabouts and the FBI's misuse of informants." In June 2003, william Bulger appeared before the committee, where he was grilled by legislators from both parties. He testified: "I do not know where my brother is. I do not know where he has been over the past eight years. I have not aided James Bulger in any way while he has been a fugitive." Bulger added: "while I worried about my brother, I now recognize that I didn't fully grasp the dimensions of his life. Few people probably did. By definition, his was a secretive life. His actions were covert, hidden even from--or perhaps hidden especially from those who loved and cared about him. The subject that interests so many, the life and the activities of my brother James is painful and difficult for me." Bulger said that the only contact with his brother during the fugitive years was a short telephone call in January 1995, shortly after his brother was indicted. Following this testimony, Massachusetts governor Mitt Romney waged an extended and ultimately successful effort to get Senator Bulger to resign from the presidency of the University of Massachusetts; Bulger resigned in August 2003.

John "Jackie" Bulger, a retired Massachusetts court clerk magistrate, was convicted in April 2003 of committing perjury in front of two grand juries regarding sworn statements he gave concerning contacts with his fugitive brother.

After his split from Cyr, Bulger began a relationship with Theresa Stanley, a South Boston divorcée with several children. Bulger bought her an expensive house in suburban Quincy, Massachusetts, and acted as father to her children while commuting to "work" in South Boston. However, he was repeatedly unfaithful to her with a host of other women, and was often absent while overseeing the running of his organization. In a 2004 interview Stanley stated that she was planning to publish her memoirs; however, she died of lung cancer in 2012 at the age of 71.

The 2006–2008 Showtime TV series Brotherhood, about two Irish-American brothers on opposite sides of the law, was inspired by the relationship between Whitey and Billy Bulger, although the show takes place not in Boston but in nearby Providence, Rhode Island.

In the TV series Rizzoli & Isles, which premiered in 2010, the character of Paddy Doyle, an Irish-American mobster who is the biological father of lead character Maura Isles, is based on a romanticized vision of Bulger..

In a 2011 interview Kevin Weeks expressed surprise at Bulger's decision to cooperate after his arrest. Weeks said, "I don't understand because he's not the same as I remember him. I can't believe he's so chatty right now. So I don't know what he's doing". Weeks added that he is not afraid of Bulger, and that the residents of Boston should not be either: "I don't think he's Pablo Escobar where he can just walk out of his prison cell and come to South Boston or anywhere. No, no one's worried about him."

Greig initially indicated that she would go to trial rather than accept a plea bargain. In March 2012, however, Greig pleaded guilty to conspiracy to harbor a fugitive, identity fraud and conspiracy to commit identity fraud. On June 12, 2012, she was sentenced to eight years in federal prison. She declined to speak during her sentencing.

The 2013 television drama The Blacklist starring James Spader about a career Criminal who turns himself in to work with the FBI on his own terms was inspired by Bulger's story.

The 2014 documentary film Whitey: United States of America v. James J. Bulger, made by Joe Berlinger, is based on Bulger's trials

The film Black Mass—released September 18, 2015 in the US—stars Johnny Depp as Bulger and was directed by Scott Cooper. The film's screenplay, by Mark Mallouk and Jez Butterworth, is based on the 2001 non-fiction book Black Mass: The True Story of an Unholy Alliance Between the FBI and the Irish Mob, by Dick Lehr and Gerard O'Neill. The film chronicles Bulger's years as an FBI informant, and his manipulation of his FBI handler as a means to eradicate his rivals for control of the Boston underworld, the Italian Mafia.