McAdoo's autobiography "Crowded Years" tells of his childhood in Georgia and Tennessee and how he became a corporate lawyer first in Tennessee and then from 1892 in New York. From 1897 to 1903 he was a law partner in New York with William McAdoo, no relation, who had been a congressman from Hudson County NJ up to 1890, Assistant Secretary of the Navy 1893-1897, and would be Police Commissioner in New York in 1905.

During the later 1890s William Gibbs McAdoo took on leadership of a project to build a railway tunnel under the Hudson River. The Hudson Tunnel had been partly constructed in 1879-1891 by Dewitt Clinton Haskin. It was one of the first underwater tunnels to be started anywhere, and great difficulty was encountered because of the limited state of the art and Haskin's stubborn refusal to listen to advice. The basic engineering principles had been established by the 1890s and the last attempt to build the tunnel had stopped only because its English financiers would put no more money into it. The bondholders formed a new company in 1902 and McAdoo, by then known for his ability to raise funds, was elected president. McAdoo says in his autobiography that it's best to ask a wealthy investor for a large sum in order to get their attention. Under his leadership the twin Haskin tubes were completed and opened in 1908 as the first part of the Hudson and Manhattan Railroad, sometimes known as the Hudson Tubes. The popular McAdoo told the press that his motto was "The Public Be Pleased". He saw the small system through to its completion in 1911. It is now operated as PATH.

McAdoo was lured away from business after he worked for the Wilson presidential campaign in 1912. President Woodrow Wilson asked him to serve as Secretary of the Treasury from 1913 to 1918. McAdoo was instrumental in forging the legislation that founded the Federal Reserve. He also married Wilson's daughter, Eleanor Randolph Wilson, at the White House on May 7, 1914. When the USRA was formed on December 26, 1917, McAdoo was appointed Director General of Railroads; he held this position until November 1919 when armistice was declared in World War I, and he retired from the USRA. After leaving the Wilson Cabinet, he ran twice for the Democratic nomination for President, losing to James M. Cox in 1920, and to John W. Davis in 1924, even though in both years he led on the first ballot. He served as Senator for California from 1933-1938. He and Eleanor were divorced in 1934.

McAdoo was a "Dry" with respect to Prohibition, and was the favored candidate of the Ku Klux Klan in 1924 when the other front-runner appeared to be the Catholic Al Smith of New York. McAdoo took a payment of $25,000 from oil executive Edward Doheny in connection with the Teapot Dome scandal, but returned it once he discovered Doheny's links with Secretary of the Interior Albert Bacon Fall.

McAdoo once famously said that the speeches of President Warren Harding "leave the impression of an army of pompous phrases moving over the landscape in search of an idea; sometimes these meandering words would actually capture a straggling thought and bear it triumphantly, a prisoner in their midst, until it died of servitude and overwork."

McAdoo's former home in Chattanooga's Fort Wood neighborhood has been restored and is now a private residence.