Born Gaspar Griswold Bacon, Jr. in Barnstable, Massachusetts, his family were one of the prominent Brahmin families and active in politics. His father Gaspar G. Bacon was on the board of Harvard University, and would be elected lieutenant governor of Massachusetts.

Born to a life of privilege and wealth he was graduated from Harvard. He summered with his family at Woods Hole on Cape Cod where he became involved during the early 1930s with the "University Players," at West Falmouth. There he met then unknown performers James Stewart and Henry Fonda with whom he later shared accommodation for a time while he struggled to establish himself.

His acting career failed to progress, and he drifted for several years. He moved to New York City where he was sponsored by a wealthy British patron, and although he once again failed to secure employment, he began to wear expensive clothes and jewellery, leading to speculation that he was acting as a gigolo.

He moved to Los Angeles, California where he met and married an Austrian singer, Greta Keller. In her later years, Keller disclosed that Bacon was homosexual, and that she was lesbian, and that their marriage partly served as what she referred to as a "beard", allowing both of them to maintain a respectable facade in Hollywood, where they were both attempting to establish film careers.

In 1942 Howard Hughes met Bacon, and signed him to an exclusive contract, with the intention of casting him in The Outlaw (1943) as Billy the Kid. Bacon was screentested for the role, and was found to be unsuitable. Keller explained that Hughes and Bacon had started a sexual relationship before the contract was signed, and that this continued for some time, however Hughes later discarded Bacon, both professionally and sexually for the actor Jack Buetel, who was subsequently cast as Billy the Kid. Hughes kept Bacon to the terms of his contract, and while refusing to cast him in important parts, allowed him to play several small roles, usually as college boys. As his interest in Bacon diminished further, Hughes allowed him to take a role in a Republic Pictures serial The Masked Marvel (1943). The serial was produced with a low budget, and marked a low point in Bacon's career, with Keller recalling that he was completely humiliated. Today it remains his best-remembered work, however.

In September 1943, Bacon was seen driving a car erratically in Santa Monica, California before running off the road and into the curb. Several witnesses saw him climb out of the car and stagger briefly before collapsing. As they approached he asked them to help him, but died before he could say anything more. A small knife was found in his back - the blade had punctured his lung and caused his death. Keller, in an advanced stage of pregnancy, collapsed when she heard of her husband's death, and later her baby was still-born. When found, Bacon was wearing only a swimsuit, and a wallet and camera were found in his car. The film from the camera was developed and found to contain only one image, that of Bacon, nude and smiling on a beach. Police theorised that the photograph had been taken shortly before his death by his killer. The case attracted publicity for a time and officially remained unsolved.

Keller wrote her memoirs shortly before her death in 1977. In them she described Bacon's growing frustration with Hughes' treatment of him, and described how Bacon had written a lengthy "article" relating details of his affair with Hughes. Keller described some of the entries as "pornographic", and recalled that Bacon had explained that he intended to show the article to Hughes, and to allow him to keep and destroy the copy in exchange for releasing him from his contract. Keller said she urged Bacon to reconsider but that he refused, and that when he left the house, in his swimsuit, supposedly to go to the beach, she had believed he was meeting someone. In her unpublished memoirs, quoted by the author Darwin Porter, Keller stated her belief that her husband had been murdered by Hughes.