Lipscomb was born in Cleveland, Ohio. His family moved to Lexington, Kentucky in 1920, and he lived there until he received his Bachelor of Science degree in Chemistry at the University of Kentucky in 1941. He went on to earn his Doctor of Philosophy degree in Chemistry from the California Institute of Technology (Caltech) in 1946.

In this area Lipscomb originally intended a more ambitious project: "My original intention in the late 1940s was to spend a few years understanding the boranes, and then to discover a systematic valence description of the vast numbers of electron deficient intermetallic compounds. I have made little progress toward this latter objective. Instead, the field of boron chemistry has grown enormously, and a systematic understanding of some of its complexities has now begun." Examples of these intermetallic compounds are KHg₁₃ and Cu₅Zn₇. Of perhaps 24,000 of such compounds the structures of only 4,000 are known (in 2005) and we cannot predict structures for the others, because we do not sufficiently understand the nature of the chemical bond. This study was not successful, in part because the calculation time required for intermetallic compounds was out of reach in the 1960s, but intermediate goals involving boron bonding were achieved, sufficient to be awarded a Nobel Prize.

Lipscomb was married to the former Mary Adele Sargent from 1944 to 1983. They had three children, one of whom lived only a few hours. He married Jean Evans in 1983. They had one adopted daughter.

From 1946 to 1959 he taught at the University of Minnesota. From 1959 to 1990 he was a professor of chemistry at Harvard University, where he was a professor emeritus since 1990.

Lipscomb deduced the molecular structure of boranes (compounds of boron and hydrogen) using X-ray crystallography in the 1950s and developed theories to explain their bonds. Later he applied the same methods to related problems, including the structure of carboranes (compounds of carbon, boron, and hydrogen).

The Colonel is how Lipscomb's students referred to him, directly addressing him as Colonel. "His first doctoral student, Murray Vernon King, pinned the label on him, and it was quickly adopted by other students, who wanted to use an appellation that showed informal respect. ... Lipscomb's Kentucky origins as the rationale for the designation." Some years later in 1973 Lipscomb was made a member of the Honorable Order of Kentucky Colonels.

The 1976 Nobel Prize in Chemistry was awarded to Lipscomb "for his studies on the structure of boranes illuminating problems of chemical bonding". In a way this continued work on the nature of the chemical bond by his Doctoral Advisor at the California Institute of Technology, Linus Pauling, who was awarded the 1954 Nobel Prize in Chemistry "for his research into the nature of the chemical bond and its application to the elucidation of the structure of complex substances."

Subsequent Nobel Prize winner Ada Yonath, who shared the 2009 Nobel Prize in Chemistry with Thomas A. Steitz and Venkatraman Ramakrishnan, spent some time in Lipscomb's lab where both she and Steitz were inspired to pursue later their own very large structures. This was while she was a postdoctoral student at MIT in 1970.

Lipscomb, along with several other Nobel laureates, was a regular presenter at the annual Ig Nobel Awards Ceremony, last doing so on September 30, 2010.

Lipscomb resided in Cambridge, Massachusetts until his death in 2011 from pneumonia.

The ethane barrier to rotation (diagram at left) was first calculated accurately by Pitzer and Lipscomb using the Hartree–Fock (SCF) method.