He was born and raised in Baton Rouge, Louisiana, and he graduated from Istrouma High School. He had an uncommon combination of brute strength with the speed of a sprinter. In 1960, his signing by the Houston Oilers followed a fierce bidding war that began when Oilers owner Bud Adams met Cannon in the end zone following LSU's Sugar Bowl victory, and ended in court, with the AFL winning against the NFL. That put the fledgling league on the football map. Cannon, at halfback, scored an 88-yard touchdown on a pass from George Blanda in the first AFL Championship game, a 24-16 victory over the Los Angeles Chargers. He scored the only touchdown in the Oilers’ repeat victory over the (San Diego) Chargers in the second-ever AFL Championship game.

Cannon amassed 2,043 all-purpose yards in 1961, and led the league in rushing. He played for the Oilers from 1960 through 1963 and went to the Oakland Raiders in 1964. Al Davis converted him to a tight end during the 1964 season, and he finished his career as one of the best players of all time at that position. Cannon made the AFL All-star team as a halfback in 1961, and as a tight end in 1969. In 1967, he scored 10 touchdowns receiving. He scored 64 touchdowns in his career, 47 of them receiving. He played in a total of six AFL Championship games, winning twice with the Oilers and once with the Raiders.

Billy Cannon is one of twenty players who played the entire ten years of the American Football League.

Cannon later became an orthodontist and subsequently served federal prison time for counterfeiting. His life is claimed to be the vaguely disguised subject matter of the novel (and subsequent motion picture) Everybody's All-American by sportswriter Frank Deford, although Deford denies this.

Cannon's Heisman Trophy is displayed at T.J. Ribs restaurant in Baton Rouge. Cannon has eaten for free there since 1986 when, short on cash, he sold the trophy to restaurant owner Tom Moran.