William Cowper was born in Berkhamsted, Hertfordshire, where his father John Cowper was rector of the Church of St Peter. His mother was Ann Cowper. He and his brother John were the only two of seven children to live past infancy. Ann died giving birth to John on 7 November 1737. His mother’s death at such an early age troubled william deeply and was the subject of his poem, "On the Receipt of My Mother's Picture," written more than fifty years later. He grew close to her family in his early years. He was particularly close with her brother Robert and his wife Harriot. They instilled in young william a love of reading and gave him some of his first books – John Bunyan’s Pilgrim’s Progress and John Gay’s Fables.

Cowper was first enrolled in Westminster School in April of 1742 after moving from school to school for a number of years. He had begun to study Latin from a young age, and was an eager scholar of Latin for the rest of his life. Older children bullied Cowper through many of his younger years. At Westminster School he studied under the headmaster John Nicoll. At the time Westminster School was popular amongst families belonging to England’s Whig political party. Many intelligent boys from families of a lower social status also attended, however. Cowper made lifelong friends from Westminster. He read through the Iliad and the Odyssey, which ignited his lifelong scholarship and love for Homer’s epics. He grew skilled at the interpretation and translation of Latin, which he put to use for the rest of his life. He was skilled in the composition of Latin as well and wrote many verses of his own.

In 1763 he was offered a Clerkship of Journals in the House of Lords, but broke under the strain of the approaching examination; he experienced a period of depression and insanity. At this time he tried three times to commit suicide and was sent to Nathaniel Cotton's asylum at St. Albans for recovery. His poem beginning "Hatred and vengeance, my eternal portions" (sometimes referred to as "Sapphics") was written in the aftermath of his suicide attempt.

In 1773, Cowper experienced an attack of insanity, imagining not only that he was eternally condemned to hell, but that God was commanding him to make a sacrifice of his own life. Mary Unwin took care of him with great devotion, and after a year he began to recover. In 1779, after Newton had moved from Olney to London, Cowper started to write poetry again. Mary Unwin, wanting to keep Cowper's mind occupied, suggested that he write on the subject of The Progress of Error. After writing a satire of this name, he wrote seven others. These poems were collected and published in 1782 under the title Poems by william Cowper, of the Inner Temple, Esq.

At Olney, Newton invited Cowper to contribute to a hymnbook that he was compiling. The resulting volume, known as Olney Hymns, was not published until 1779 but includes hymns such as "Praise for the Fountain Opened" (beginning "There is a fountain fill'd with blood") and "Light Shining out of Darkness" (beginning "God Moves in a Mysterious Way") which remain some of Cowper's most familiar verses. Several of Cowper's hymns, as well as others originally published in the Olney Hymns, are today preserved in the Sacred Harp, which also collects shape note songs.

In 1781 Cowper met a sophisticated and charming widow named Lady Austen who inspired new poetry. Cowper himself tells of the genesis of what some have considered his most substantial work, The Task, in his "Advertisement" to the original edition of 1785:

Cowper and Mary Unwin moved to Weston Underwood, Buckinghamshire in 1786, having become close with his cousin Lady Harriett Hesketh (Theodora's sister). During this period he started his translations of Homer's Iliad and Odyssey into blank verse. His versions (published in 1791) were the most significant English renderings of these epic poems since those of Alexander Pope earlier in the century. Later critics have faulted Cowper's Homer for being too much in the mould of John Milton.

He also wrote a number of anti-slavery poems and his friendship with Newton, who was an avid anti-slavery campaigner, resulted in Cowper being asked to write in support of the Abolitionist campaign. Cowper wrote a poem called 'The Negro's Complaint' (1788) which rapidly became very famous, and was often quoted by Dr. Martin Luther King, Jr. during the 20th century civil rights movement. He also wrote several other less well known poems on slavery in the 1780s, many of which attacked the idea that slavery was economically viable.

In 1795 Cowper moved with Mary to Norfolk. They originally stayed at North Tuddenham, then at Dunham Lodge near Swaffham and then Mundesley before finally settling in East Dereham.

Mary Unwin died in 1796, plunging Cowper into a gloom from which he never fully recovered. He did continue to revise his Homer for a second edition of his translation. Aside from writing the powerful and bleak poem, "The Castaway", he penned some English translations of Greek verse and translated some of the Fables of John Gay into Latin.

Cowper was seized with dropsy in the spring of 1800 and died. He is buried in the chapel of St Thomas of Canterbury, St Nicholas's Church, East Dereham. A window in Westminster Abbey honours him.

In 1823, Cowper's correspondence was published from the original letters in the possession of his kinsman John Johnson.

After education at Westminster School, Cowper was articled to Mr Chapman, solicitor, of Ely Place, Holborn, to be trained for a career in law. During this time, he spent his leisure at the home of his uncle Bob Cowper, where he fell in love with his cousin Theodora, whom he wished to marry. But as James Croft, who in 1825 first published the poems Cowper addressed to Theodora, wrote, "her father, from an idea that the union of persons so nearly related was improper, refused to accede to the wishes of his daughter and nephew." This refusal left Cowper distraught.

Cowper is represented with fifteen hymns in American Presbyterian Edwin Hatfield's 1872 opus The Church Hymn Book for the Worship of God.