Faced with an indigent husband, McCarty's mother took in boarders in order to provide for her sons. She was by now afflicted with tuberculosis even though she was seen by her boarders and neighbors as "a jolly Irish lady, full of life and mischief". The following year, on 16 September 1874, his mother died of her condition and at 14 McCarty was forced to find work in a hotel. The manager was impressed by the young boy, boasting that he was the only kid who ever worked for him that didn't steal anything. His school teachers thought that the young orphan was "no more of a problem than any other boy, always quite willing to help with chores around the schoolhouse". On September 23, 1875 McCarty was arrested for hiding a bundle of stolen clothes for a man playing a prank on a Chinese laundryman. Two days after McCarty was thrown in jail, the scrawny teen escaped by worming his way up the jailhouse chimney. From that point onward McCarty would be a fugitive.

He eventually found work as an itinerant ranch hand and shepherd in southeastern Arizona. In 1877 he became a civilian teamster at Camp Grant Army Post, with the duty of hauling logs from a timber camp to a sawmill. The civilian blacksmith at the camp, Frank "Windy" Cahill, took pleasure in bullying young McCarty. On August 17 Cahill attacked McCarty after a verbal exchange and threw him to the ground. McCarty retaliated by drawing his gun and shooting Cahill, who died the next day. Once again McCarty was in custody, this time in the Camp's guardhouse awaiting the arrival of the local marshal. Before the marshal could arrive, however, McCarty escaped. It has also been reported that the encounter with Frank Cahill took place in a saloon.

Again on the run, McCarty, who had begun to refer to himself as Willam H. Bonney, next turns up in the house of a Heiskell Jones in Pecos Valley, New Mexico. Apaches had stolen McCarty's horse which forced him to walk many miles to the nearest settlement, which was Mrs. Jones's house. She nursed the young man, who was near death, back to health. The Jones family developed a strong attachment to McCarty and gave him one of their horses.

Lincoln County Cattle War In the fall of 1877 McCarty moved to Lincoln County, New Mexico and was hired as a cattle guard by John Tunstall, an English cattle rancher, banker, and merchant, and Tunstall's partner Alexander McSween. A conflict, soon to become known as the Lincoln County Cattle War, had begun between the established town merchants (called "The House") and the ranchers. Events turned bloody on February 18, 1878, when Tunstall, unarmed, was caught on an open range while herding cattle and shot to death by members of "The House". Tunstall's murder enraged McCarty and the other ranch hands. They formed their own enforcement group called "The Regulators" and, in early March, proceeded to hunt down two of the members of the posse that had killed Tunstall. They captured and then killed them on the way back to Lincoln, also killing one of their own members whom they suspected to be a traitor. A few weeks later, they tracked down and killed an old buffalo hunter known as "Buckshot" Roberts, whom they suspected of involvement in the Tunstall murder, but not before Roberts shot and killed Dick Brewer, who had been the Regulators' leader. At this point McCarty, despite his youth, assumed command of the group, and it was probably he who masterminded the Regulators next move, the brazen daylight ambush and murder of Lincoln's Sheriff William Brady and his deputy George Hindman, thought to be sympathetic to "The House", on the streets of Lincoln on April 1, 1878.

Under indictment for the Brady killing, McCarty and his gang spent the next several months in hiding, and were trapped, along with McSween, in McSween's home in Lincoln on July 15, 1878, by members of "The House" and some of Brady's men. After a five day siege, McSween's house was set on fire; McCarty and the other Regulators fled, McCarty killing an enforcer named Bob Beckwith in the process. McSween was shot down while fleeing the blaze, and his death essentially marked the end of the Lincoln County Cattle War.

Lew Wallace and amnesty In the autumn of 1878, retired Union General Lew Wallace became the new territorial governor of New Mexico. In order to restore peace to Lincoln County, Wallace proclaimed an amnesty for any man involved in the Lincoln County War who was not already under indictment. McCarty, who had fled to Texas after escaping from McSween's house, was under indictment but Wallace was intrigued by rumors that the young man was willing to surrender himself and testify against other combatants if amnesty could be extended to him. In March of 1879 Wallace and McCarty, now back in the Lincoln area, met to discuss the possibility of a deal. True to form, McCarty greeted the Governor with a revolver in one hand and a Winchester rifle in the other. After several days to consider Wallace's offer, McCarty agreed to testify in return for amnesty.

The arrangement called for McCarty to submit to a show arrest and a short stay in jail until the conclusion of his courtroom testimony. Even though his testimony helped to indict one of the powerful House faction leaders, John Dolan, the district attorney defied Wallace's order to set McCarty free after testifying; instead, in June, 1879, he was returned to jail. A natural-born escape artist, McCarty slipped out of his handcuffs and fled.

For the next year and a half, McCarty survived by rustling and gambling. In one well-documented episode, in January 1880, he shot dead a would-be outlaw named Joe Grant - who may or may not have been hired by the Chisums to dispose of The Kid - in an altercation in a Fort Sumner saloon. When asked about the incident later, The Kid remarked, "It was a game for two, and I got there first". He became a fixture around Fort Sumner on the Pecos River, drawing enough attention to himself through his activities as a cattle rustler that he and his gang were pursued by a posse and trapped inside a ranchhouse owned by friend James Greathouse at Anton Chico in the White Oaks area in November 1880. A posse member named James Carlyle ventured into the house under flag of truce in an attempt to negotiate the group's surrender, with Greathouse being sent out as a hostage for the posse. At some point in the night it became apparent to Carlyle that the outlaws were stalling, when suddenly a shot was accidentally fired from outside. Carlyle, assuming the posse members had shot Greathouse, decided to run for his life, crashing through a window into the snow outside. As he did so, the posse, mistaking Carlyle for one of the gang, fired on him and killed him. Realizing what they had done and now demoralized, the posse broke up, allowing McCarty and his gang to slip away. The Kid later wrote to Governor Wallace claiming innocence in the killing of Carlyle, and of involvement in cattle rustling in general.

Pat Garrett During this time, the Kid also developed a fateful friendship with an ambitious local bartender and former buffalo hunter named Patrick Garrett. Running on a platform to rid the area of rustlers, Garrett was elected as sheriff of Lincoln County in November 1880, and in early December of that year he put together a posse and set out to apprehend McCarty, now known almost exclusively as 'Billy the Kid' and carrying a $500 bounty on his head.

Garrett and his men closed in quickly. On December 19, the Kid barely escaped the posse's midnight ambush in Fort Sumner, during which one of the Kid's gang, Tom O'Folliard, was shot to death. The young outlaw's luck ran out three days later when he was tracked to an abandoned stone building located in a remote location called Stinking Springs. While the Kid and his gang were asleep inside, Garrett's posse surrounded the building and waited for sunrise. The next morning, a cattle rustler named Charlie Bowdre stepped outside to feed his horse and, mistaken for the Kid, was shot dead by the posse. Soon afterward somebody from within the building reached for the horse's halter rope but Garrett shot and killed the horse (the horse's body then blocked the only exit). As the lawmen began to cook breakfast over an open fire, Garrett and the Kid engaged in a friendly exchange, Garrett inviting the Kid outside to eat, the Kid inviting Garrett to "go to hell". Realizing that they had no hope of escape, the besieged and hungry outlaws finally surrendered later that day and were allowed to join in the meal.

Escape from Lincoln McCarty was jailed in the town of Mesilla while waiting for his April 1881 trial, and spent his time giving newspaper interviews - he was by now a famous local figure - and also peppering Governor Wallace with letters seeking clemency. Wallace, however, refused to intervene. The Kid's trial took exactly one day, and resulted in his conviction for murdering Sheriff Brady - the only conviction ever secured against any of the combatants, on either side, in the Lincoln County Cattle War. On April 13 he was sentenced by Judge Warren Bristol to hang. The execution was scheduled for May 13 and he was sent to Lincoln to await this date, held under guard by two of Garrett's deputies, James Bell and Robert Ollinger, on the top floor of the town's courthouse. On April 28, while Garrett was out of town, the Kid stunned the territory by killing both of his guards and escaping. Some of the details of the escape are unclear. Some historians believe that a friend or Regulator sympathizer left a pistol in a nearby privy that the Kid was allowed to use, under escort, each day; the Kid then retrieved this gun while in the privy and, after Bell had led him back to the courthouse, turned it on his guard as the two of them reached the top of a flight of stairs inside. Another theory holds that the Kid slipped his manacles at the top of the stairs, struck Bell over the head with them and then grabbed Bell's own gun and shot him. However it happened, Bell staggered out into the street and collapsed, mortally wounded. Meanwhile, the Kid scooped up Ollinger's ten-gauge double barrel shotgun and waited at the upstairs window for Ollinger, who had been across the street with some other prisoners, to come to Bell's aid. As Ollinger came running into view, the Kid levelled the shotgun at him, called out "Hello, Bob" and shot him dead. After cutting his leg irons with an axe, the young outlaw commandeered a horse and rode leisurely out of town, leaving the terrified townsfolk in his wake.

Death The Kid's freedom would prove short-lived, however. Responding to rumours that the Kid was still lurking in the vicinity of Fort Sumner almost three months after his escape, Sherriff Garrett and two deputies set out on July 14, 1881 to question one of the town's residents, a friend of the Kid's named Pete Maxwell. Near midnight, as Garrett and Maxwell sat talking in Maxwell's darkened bedroom, the Kid himself unexpectedly entered the room. Not recognizing Garrett in the poor light, the Kid drew his pistol and backed away, asking "¿Quién es? ¿Quién es?" (Spanish for "Who is it? Who is it?"). Recognizing the Kid's voice, Garrett drew his own pistol and fired twice, the first bullet hitting the Kid just above his heart and killing him instantly.

Although the popularity of this story persists, it wasn't until recently that historians and scientists figured out that Garrett couldn't possibly draw his weapon and fire in time to kill the Kid, who already had his weapon drawn. A new theory is that the Kid was ambushed, Garret already had his weapon withdrawn and waited for the Kid to enter.

Henry McCarty, alias Henry Antrim, alias William H. Bonney, alias Billy the Kid, was buried the next day in Fort Sumner's old military cemetery, between his fallen companions Tom O'Folliard and Charlie Bowdre. A single tombstone was later erected over the graves, giving the three outlaws' names and with the word "Pals" also carved into it.

Despite being charged with the murder of 21 men, William H. Bonney is only known to have participated in the killing of 9 men. Five of them were in concert with up to 40 other "Regulators" so it will never be known whether or not it was Bonney's bullets that did the killing and, of the remaining four, two were in self-defense. The only "unjustifiable homicides" committed by Williams H. Bonney were those of Deputies Bell and Ollinger. However, given that he was promised a pardon by Governor Wallace that never materialized, despite Bonney holding up his end of the bargain and testifying against the Murphy-Dolan and Cavalrymen involved in the siege at Alex McSween's home, these killings were not purposeless either.