He was born in Chicago, was educated at Hillsdale College, the University of Vienna, and Indiana University (gaining a PhD in history in 1961) and served in the United States Army.

His brother, Dan Crane, served together with him as another Congressman from Illinois for three terms. Another brother, David Crane, ran for Congress from Indiana a few times simultaneously with Phil and Dan. The handsome brothers were dubbed "the Kennedys of the Right." However, David never won a seat in Congress, and Dan ended up being defeated for re-election in 1984 due, in part, to his involvement in the 1983 Congressional Page sex scandal. Phil Crane began to battle alcoholism, which he only publicly acknowledged after winning reelection in 2000.

Crane was a faculty member at Indiana and at Bradley University in Peoria, a staff member for the Republican National Committee and a director of research for the 1964 Republican presidential candidate Barry Goldwater.

He was first elected to Congress in the 13th District of Illinois in a 1969 special election, succeeding Donald Rumsfeld, who was appointed to a position in the Nixon Administration. He soon established himself as one of the House's most conservative members, leading a small but growing cluster of right-wing congressmen who had cut their teeth in the early 1960s and drew their inspiration from Goldwater's presidential campaign. \He was handily elected to a full term in 1970, and was reelected 16 times. His district number changed as Illinois lost population--from the 13th (1969-73) to the 12th (1973-93) to the 8th (1993-2005). His district was long considered the most Republican district in the Chicago area, if not in all of Illinois. He almost always won with 70 percent or more of the vote until the 1990s, when he had to fend off more moderate Republicans in the primary and better-funded Democrats in the general election.

Soon after being elected to his first full term in 1970, he was tapped by several conservative activists, including Paul Weyrich, to form a group of conservative congressmen to keep watch on the Republican leadership, which at the time was seen as too moderate. This new group was known as the Republican Study Committee, and Crane served as its first chairman. He remained a member of the group for the remainder of his time in Congress.

In 1978, shortly before the general election, Crane announced that he would be a candidate for the Republican nomination for president. This surprised many observers, as Crane had been expected to support the probable candidacy of former California governor Ronald Reagan. At the time of his announcement, Crane expressed doubts that Reagan would run again (after two failed attempts for the nomination in 1968 and 1976), and intimated that, should Reagan run, he would likely drop out. However, he did stay in the race after Reagan's entry, and was one of the early exiters during the Republican primaries.

After the 1980 campaign, Crane's influence rapidly declined. Newt Gingrich, who had been elected to Congress soon after Crane announced his candidacy for president, soon passed him as the leading conservative firebrand in the House. By the time the Republicans took control of the House in 1994, he was widely seen as merely a "foot soldier" to Republican interests. Crane did have some influence as a member of the House Ways and Means Committee, which handles tax issues. As chairman of its trade subcommittee, he was effective in his efforts to promote his staunch free trade views. However, when the full committee's chairman, Bill Archer of Texas, retired after the 2000 elections, Crane made a bid for the highly coveted post of Ways and Means chairman. He was the committee's most senior member, having been on the panel since 1975. However, due to his alcoholism issues, he was passed over in favor of Bill Thomas of California. He had to content himself with the vice-chairmanship.

In 2002, Crane's Democratic opponent was business consultant Melissa Bean. A general theme of her campaign was that Crane was out of touch with his constituents. Even some Republicans claimed they had not seen him in decades. He was one of the few congressmen whose Washington, DC office lacked a public email address. Despite being dramatically outspent (she received almost no funding from the national level), she surprised both parties by garnering 43f the vote in a district that supposedly had been redrawn after the 2000 Census to protect Crane (several previous opponents from both parties found their homes drawn out of the 8th and into the neighboring 10th).

Bean sought a rematch in the 2004 election. Some considered the race unwinnable for Bean, but endorsements from most major Chicagoland newspapers, along with strong support via several liberal blogs and the Democrats' Senate candidate, Barack Obama, helped make her challenge more substantial. She raised as much money as Crane, mostly from individual donors while Crane received most donations from political action committees. The national and state GOP did their best to salvage the seat, but Bean defeated Crane by 4 points even as George W. Bush carried the district in the presidential election by his largest margin of any district in the state.