Born Charles William Haines to a wealthy family in Staunton, Virginia, Haines left home at the age of 14 and moved to New York City. After winning a talent contest he moved to Hollywood where he played bit parts for several years until MGM Studios began casting him in more prominent roles.

By 1925 he was MGM's most important male star, and his films were very profitable for the studio. He was cultivated as a romantic leading man, and his combination of good looks and flair for comedy won him many fans. He made a career out of playing wise-cracking young athletic types whose large egos hold them back until an attitude adjustment leads to success.

He appeared in hits such as Sally, Irene and Mary (1926 with newcomers Joan Crawford and Constance Bennett), West Point (1927 also with Crawford), and scored his biggest personal successes with Brown of Harvard (1926) and Show People (1928), opposite Marion Davies. Haines was a top-five box office star from 1928 to 1932. He made a successful transition into talking pictures including Hollywood Revue of 1929 (MGM's first talkie), Free and Easy, Just a Gigolo, The Girl Said No, and Way Out West.

Haines lived openly as a homosexual man, and from 1926 lived with Jimmy Shields, whom he had met when Shields was his stand-in during the production of a film. Studio publicists were able to keep Haines' sexual orientation from the press. But in 1933, when Haines was arrested in a YMCA with a sailor he had picked up in Los Angeles' Pershing Square, studio head Louis B. Mayer delivered Haines with an ultimatum to choose between a sham marriage or his relationship with Shields. Haines chose Shields, so Mayer terminated his contract, quickly recasting Robert Montgomery in roles that had been planned for Haines. Haines made a few minor films at cheap studios, then retired.

Haines and Shields began a successful career as interior designers and antique dealers. Among their early clients were friends such as Joan Crawford and Carole Lombard, Marion Davies and William Randolph Hearst. Their lives were disrupted in 1936 when members of the White Legion wearing hoods to hide their faces, dragged the two men from their home and beat them, because a neighbour had accused the two of propositioning his son. Crawford, along with other stars such as Claudette Colbert, Kay Francis and Charles Boyer urged the men to report this to the police. Marion Davies asked Hearst to use his influence to ensure the neighbours were prosecuted to the full extent of the law, but ultimately Haines and Shields chose not to report the incident. The couple finally settled into the Hollywood community in Malibu, and their business prospered until their retirement in the early 1970s, barring a brief interruption when Haines was drafted for World War II. The long list of clients Haines and Shields worked for included Ronald Reagan and Nancy Reagan when Reagan was governor of California.

Haines never returned to films. Gloria Swanson extended him a personal invitation to appear with her in the film Sunset Boulevard (1950) but he refused.

Haines and Shields remained together for the rest of their lives. Joan Crawford (a lifelong friend) described them as "the happiest married couple in Hollywood". Haines died from lung cancer in Santa Monica, California at the age of 73. Soon afterward, Shields, who suffered from what many believe to be Alzheimer's Disease (and had actually been ill for a longer period of time than Haines) put on Haines' pajamas, took an overdose of pills, and crawled into their bed to die. They were interred side by side in the Woodlawn Memorial Cemetery.

William Haines has a star on the Hollywood Walk of Fame for his contributions to Motion Pictures, at 7012 Hollywood Boulevard. His life was detailed in William J Mann's critically acclaimed 1998 biography, Wisecracker: The Life and Times of William Haines, Hollywood's First Openly Gay Star.