Born in a log cabin near Unionville Center, Ohio. Fairbanks' ancestry traced back to Oliver Cromwell, with Jonathan Fayerbankes the first family member to reach America in 1636. The son of a wagon-maker, Fairbanks' formative years saw his family's home used as a hiding place for runaway slaves. After attending country schools and working on a farm, Fairbanks left for Ohio Wesleyan University, where he graduated in 1872. While there, Fairbanks served as co-editor of the school newspaper with Cornelia Cole, who he married after both graduated from the school.

Fairbanks' first position was as an agent of the Associated Press in Pittsburgh, Pennsylvania, reporting on political rallies for Horace Greeley during the 1872 U.S. Presidential election. Fairbanks then moved to Cleveland, Ohio, where he briefly attended law school before his admittance to the Ohio bar in 1874, then moved to Indianapolis, Indiana the same year.

During his early years in Indiana, Fairbanks was paid $5,000 a year after being appointed manager for the bankrupt Indianapolis, Bloomington and Western Railroad. With the assistance of his uncle, Charles W. Smith, whose connections had helped him obtain the position, Fairbanks was able to parlay his position into a lucrative role as a railroad financier, including serving as counsel for millionaire Jay Gould.

Prior to the 1888 Republican Convention, federal judge Walter Q. Gresham sought Fairbanks' help in seeking the nomination for U.S. President. While the bid was ultimately unsuccessful, Fairbanks began to take an even greater interest in politics, falling short in a campaign for the United States Senate in 1893.

He was elected as a Republican to the United States Senate in 1896, after having delivered the keynote address during the convention that nominated William McKinley for President.

During his eight years in the U.S. Senate, Fairbanks served as a key adviser to McKinley during the Spanish-American War and was also the Chairman of the Committee on Immigration and the Committee on Public Buildings and Grounds. In 1898, Fairbanks was appointed a member of the United States and British Joint High Commission which met in Quebec City for the adjustment of Canadian questions.

He was elected Vice President of the United States in 1904 on the Republican ticket with Theodore Roosevelt and served all four years. In something of a surprise, Roosevelt chose William Howard Taft as his potential successor four years later, sending Fairbanks back to the practice of law.

In 1912, Fairbanks was in charge of establishing the platform for the Republican party, then four years later, sought the Republican presidential nomination. While he failed in that bid, he did win the nomination for vice president under Charles E. Hughes on June 10. Five months later, Hughes and Fairbanks lost a close election to Woodrow Wilson and Thomas Marshall.

Fairbanks once again resumed the practice of law in Indianapolis, but his health started to fail in the year prior to his death. He was interred in Crown Hill Cemetery.

The city of Fairbanks, Alaska is named after him.