Bilbo was born to a poor family in Pearl River County. He attended college at Peabody College in Nashville, Tennessee and law school at Vanderbilt University, although he did not graduate from either institution. Later, Bilbo worked as a teacher. In 1908, he was admitted to the bar in Tennessee and began a law practice in Poplarville, Mississippi.

Bilbo served in the Mississippi State Senate from 1908 to 1912. During this time, he survived impeachment for bribery by one vote, with the Senate passing a resolution calling him "unfit to sit with honest, upright men in a respectable legislative body". During his subsequent campaign for lieutenant governor, he made a comment to a state senator from Yazoo City. The man was insulted, and during the ensuring skirmish the man broke his cane over Bilbo's head. But Bilbo's campaign was successful and he served as lieutenant governor from 1912 to 1916. One of his first acts as lieutenant governor was removing the resolution calling him "unfit to sit with honest men" from the records.

Bilbo was elected to the office of governor in 1915. As governor, his populist program was implemented, including a state highway system. Bilbo was unable to run for reelection in 1919 due to term limits then in the Mississippi state constitution.

Bilbo then decided to run for the House of Representatives. During the campaign, a bout of "Texas fever" broke out, and Bilbo supported a program to dip cattle in insecticide to kill the ticks which carried Texas fever. Mississippi farmers were generally not happy about the idea and Bilbo was unable to win a seat in Congress.

Afterwards, Bilbo once again caused controversy by hiding in a barn to avoid a subpoena in a case involving his friend, then-governor Lee M. Russell, who had served as Bilbo's lieutenant governor and Russell's former secretary, who accused Russell of breach of promise and of seducing and impregnating her; as a result she underwent an abortion which left her unable to have children. Bilbo had been sent to try and convince this woman to not sue Russell. Bilbo was unsuccessful at this, but the woman was also unsuccessful in her suit against Russell. Judge Edwin R. Holmes sentenced him to thirty days in prison for "contempt of court" and Bilbo actually served ten days, declaring to the crowd outside his cell that he would run for governor again in 1923.

But in 1923 Bilbo failed to win back the office, although in 1927, he was elected to a second term in a runoff over governor Dennis Murphree. His second term was filled with controversy involving his idea to move the University of Mississippi from Oxford to Jackson. That idea was defeated but Bilbo persuaded the college board to dismiss two college presidents and many of their fellow board members. During the 1928 presidential election, Bilbo helped Al Smith carry the state despite the existence of overwhelming anti-Catholic prejudice by claiming that Herbert Hoover had met with a black member of the Republican National Committee and danced with her. Bilbo also encountered problems with his enemies, who controlled the state legislature. Bilbo refused to sign the tax bills and the legislature refused to approve his bills. At the end of his term, the state of Mississippi was broke, as was Bilbo personally.

After his second gubernatorial term ended in 1932, Bilbo worked as a "consultant on public relations" for the Department of Agriculture for a short time, a reward from Senator Pat Harrison for Bilbo's campaigning. Soon afterwards, Bilbo told Harrison of his plans to run against incumbent senator Hubert Stephens and Harrison told Bilbo that he would be supporting Stephens.

In 1934, he defeated Stephens to win a seat in the United States Senate. Bilbo became involved in a feud with the senior senator from his state, Harrison. The feud started when Harrison nominated Edwin R. Holmes for the Fifth Circuit Court of Appeals. Bilbo despised Holmes, apparently carrying lots of leftover animus from the contempt citation, and spoke against him for five hours, and he was the only senator to vote against Holmes' confirmation. Harrison lost his bid to become Senate Majority Leader in 1937 by one vote. Bilbo had gotten his revenge by voting against Harrison.

In the Senate, Bilbo was a supporter of Franklin Roosevelt's New Deal. Bilbo caused controversy in the Senate due to his outspoken support of segregation and white supremacy. He regularly introduced bills which would provide funds for the deportation of black Americans to Liberia and wrote a book titled Take Your Choice, Separation or Mongrelization which advocated this idea.

Bilbo was assigned to what was considered the least important Senate committee, the District of Columbia Committee, as a way to try to limit his power. He used this role to advance his white supremacist views. Bilbo was against giving any vote to District residents, especially as the District's black population continued to increase.

Bilbo was also outspoken in his belief that blacks should not be allowed to vote anywhere, the Fourteenth and Fifteenth Amendments to the Constitution to the contrary. There were many allegations of disenfranchisement by black veterans, along with allegations that his campaign tactics provoked violence. Bilbo was also accused of giving war contracts out to his friends.

Bilbo was reelected to a third Senate term in 1946, but in 1947, the United States Senate refused to seat Bilbo for this term. Many suspected a battle would ensue over this but by this time Bilbo was quite ill with oral cancer, and he returned to Mississippi to seek medical treatment. Bilbo died only a few months later at the age of 69 in New Orleans, Louisiana. He is buried at Juniper Grove Cemetery in Poplarville.