A distant relation of U.S. House Speaker and U.S. Constitution signatory Jonathan Dayton, he was born in Basking Ridge, New Jersey to farmer Joel Dayton and his wife. He graduated from the College of New Jersey (now Princeton University) in 1825 and worked as a lawyer in Freehold Borough.

In 1837, he was elected to the New Jersey Senate, then became an associate judge of the New Jersey Supreme Court the following year. Following the death of U.S. Senator Samuel L. Southard he was appointed to the United States Senate starting July 2, 1842 and was re-elected by the New Jersey Legislature as a Whig in 1845, but lost in 1851, ending his service on March 3.

In U.S. presidential election, 1856 he was elected the nascent Republican Party's first nominee for Vice President of the United States, over Abraham Lincoln. Unsuccessful, he served as attorney general of New Jersey until 1861, when President Lincoln appointed him Minister to France, serving in that role from 1861-1864 throughout most of the American Civil War. There, Dayton successfully lobbied the government of Napoleon III not to recognize the independence of the Confederacy or allow it the use of French ports. Dayton died in Paris in 1864 while serving in that capacity.

His son, William Lewis Dayton, Jr. (1839-1897), graduated from Princeton in 1858 and served as President Chester A. Arthur's Minister to the Netherlands 1882-1885.