Percy was born in Pensacola, Florida, but his family moved to Chicago, Illinois when he was an infant. As a child, he was notable for his entrepreneurial energy, and often held several jobs at once while also attending school. In the mid-1930s, his pluck brought him to the attention of his Sunday school teacher, Joseph McNabb, the president of Bell & Howell, which was then a small camera company.

After Percy graduated from the University of Chicago in 1941, he went to work full time for Bell & Howell, and within a year he was made a director of the company. Percy served three years in the United States Navy during World War II, and returned to the company in 1945.

During the war, Percy married Jeanne Dickerson, who died in 1947. Percy, with three children to care for, re-married three years later, to Loraine Guyer.

After Joseph McNabb died in 1949, Percy was made the president of Bell & Howell. During Percy's presidency, company sales grew 32-fold, employment grew 12-fold, and the company went public on the New York Stock Exchange.

In the late 1950s, Percy decided to enter politics. With the encouragement of then-President Dwight D. Eisenhower, Percy helped write Decisions for a Better America, which proposed a set of long-range goals for the Republican Party. Percy was then made the chair of the platform committee at the 1960 Republican National Convention.

Percy's first foray into electoral politics was a run for governor of Illinois in 1964, which Percy lost to Democratic incumbent Otto Kerner. His second attempt, a run for senator from Illinois, succeeded two years later, with Percy upsetting incumbent Democratic senator Paul Douglas (a former professor of Percy's at the University of Chicago). During that campaign, his daughter Valerie was murdered at the family home under mysterious circumstances, and campaigning was suspended for two weeks, but then continued. Valerie Percy's murder has never been solved, despite a long investigation.

Percy served in the Senate until 1984, when he was defeated for re-election by Paul Simon, in a campaign in which Percy was attacked for an "anti-Israel" stance because he supported the sale of AWACS planes to Saudi Arabia. Speaking, in Toronto in 1984, AIPAC's Executive Director Tom Dine boasted: "All the Jews, from coast to coast, gathered to oust Percy. And the American politicians -- those who hold public positions now, and those who aspire -- got the message."

While in the Senate, Percy was active in the areas of business and international affairs. He was in the moderate wing of the Republican Party, and explored the possibility of running for President in 1968 and 1976, but dropped out both times, supporting the unsuccessful attempt of Nelson Rockefeller to gain the Republican nomination in 1968, and the successful attempt of President Gerald Ford to regain the Republican nomination in 1976. During the early 1970s he clashed with President Richard Nixon, criticizing his conduct of the war in Vietnam.

Percy's daughter Sharon is the wife of United States Senator John D. Rockefeller IV of West Virginia. Charles Percy has three other children; Roger (born 1947), Gail (born 1953), and Mark (born 1955). He is a devout Christian Scientist.