He was born at Beresford Hall on the border of Derbyshire and Staffordshire. His father, Charles Cotton the Elder, was a friend of Ben Jonson, John Selden, Sir Henry Wotton and Izaak Walton. The son was apparently not sent to university, but was tutored by Ralph Rawson, one of the fellows ejected from Brasenose College, Oxford, in 1648. Cotton travelled in France and perhaps in Italy, and at the age of twenty-eight he succeeded to an estate greatly encumbered by lawsuits during his father's lifetime. The rest of his life was spent chiefly in country pursuits, but from his Voyage to Ireland in Burlesque (1670) we know that he held a captain's commission and served in Ireland.

His friendship with Izaak Walton began about 1655, and contradicts the assumptions about Cotton's character based on his coarse burlesques of Virgil and Lucian. Walton's initials made into a cipher with Cotton's own were placed over the door of Cotton's fishing cottage on the Dove near Hartington. Cotton contributed a second section "Instructions how to angle for a trout or grayling in a clear stream", to Walton's The Compleat Angler; the additions consisted of twelve chapters on fishing in clear water, which he understood largely but not exclusively to be fly fishing.

In 1656 he married his cousin Isabella Hutchinson, a half-sister of Col. John Hutchinson; she died in 1670. At the request of his wife's sister, Miss Stanhope Hutchinson, he undertook the translation of Pierre Corneille's Horace in 1671. In 1675, he married the dowager Countess of Ardglass; she had a jointure of £1500 a year, but he did not have the power to spend it.

The 1674 first edition of The Compleat Gamester is attributed to Cotton (by publishers of later editions, to which additional, post-Cotton material was added in 1709 and 1725, along with some updates to the rules Cotton had described earlier. The book was considered the "standard" English-language reference work on the playing of games – especially gambling games, and including billiards, card games, dice, horse racing and cock fighting, among others – until the publication of Edmond Hoyle's Mr. Hoyle's Games Complete in 1750, which outsold Cotton's then-obsolete work.

At Cotton's death in 1687 he was insolvent and left his estates to his creditors. He was buried in St James's Church, Piccadilly, on February 16, 1687.

Cotton's reputation as a burlesque writer may account for the neglect with which the rest of his poems have been treated. Their excellence was not, however, overlooked by good critics. Coleridge praises the purity and unaffectedness of his style in Biographia Literaria, and Wordsworth (Preface, 1815) gave a copious quotation from the "Ode to Winter". The "Retirement" is printed by Walton in the second part of the Compleat Angler.

He was a Derbyshire man: his father moved there from the South England to live on his wife's estates. The Peak district is no longer associated with trout fishing. In Cotton's day, the inaccessibility of good fishing spots was physical as well as legal. The opening chapters of his section of the Compleat Angler draw Cotton and his friend across a savage and mountainous landscape. The friend, who will be taught fly-fishing, expresses doubt as to whether they are still in Christendom.

"What do I think? Why, I think it is the steepest place that ever sure men and horses went down; and that, if there be any safety at all, the safest way is to alight..." says the pupil. After he picked his way down, they reach a bridge. "Do you ... travel with wheelbarrows in this country" he asks. "Because this bridge certainly was made for nothing else; why, a mouse can hardly go over it: it is not two fingers broad."

They come at length to the sheltered valley in which stands Cotton's house and fishing hut. It is the first description of paradise in fishing history. "It stands in a kind of peninsula, with a delicate clear river about it." There Cotton and his friend breakfast on ale and a pipe of tobacco to give them the strength to wield their rods. For a trout river, he says, a rod of five or six yards should be long enough. In fact, "longer, though never so neatly and artificially made, it ought not to be, if you intend to fish at ease".

Though he used a line of carefully tapered horse-hair that can hardly have weighed anything, Cotton’s rod, of solid wood, must have been heavy. His description of the sport does not resemble modern techniques of fly-casting, which began with the arrival of heavy dressed-silk lines 200 years later. On windy days, he advises his guest to fish the pools because in the rapids, where the gorge of the Dove is narrower, the wind will be too strong to fish in.

Some of Cotton's advice and preferences remain those of a real fisherman. He tells his guest to fish 'fine and far off"; and he argues for small and neat flies, carefully dressed, over the bushy productions of London tackle-dealers. The flies which catch fish will always look wrong to the untrained eye, because they look too small and too delicate.

Cotton's dressings are made with bear hair and camel's under fur; with the soft bristles from inside a black hog’s ear; and from dog’s tails. "What a heap of trumpery is here!" cries his visitor, when Cotton’s dubbing bag is opened. "Certainly never an angler in Europe has his shop half so well-finished as you have."

Cotton replies with the touchiness of a true obsessive: "Let me tell you, here are some colours, contemptible as they seem here, that are very hard to be got; and scarce any one of them, which, if it should be lost, I should not miss and be concerned about the loss of it too, once in the year."

Cotton devotes a whole chapter to collection of flies for every month of the year. Few of them have modern analogues. But he had looked closely at the world around him with the acuity and open-mindedness which distinguishes a great fly fisherman. Here is his stonefly:

His body is long and pretty thick, and as broad at the tail, almost, as at the middle; his colour is a very fine brown, ribbed with yellow and much yellower on the belly than on the back: he has two or three little whisks also at the tag of his tail, and two little horns upon his head: his wings, when full grown, are double, and flat down upon his back, of the same colour but rather darker than his body and longer than it...

On a calm day you shall see the still-deeps continually all over circles by the fishes rising, who will gorge themselves with these flies, will they purge again out of their gills.

In Montana, the fish still rise to stoneflies until the water is “continually all over circles”, but in the UK it is an anachronism. Cotton’s Derbyshire is more remote from modern England and closer to the wilderness than Montana or Alaska are now. He is quite unashamed of bait fishing, whether with flies or with grubs. He kills fish until weary. “I have in this very river that runs by us, in three or four hours taken thirty, five and thirty, and forty of the best trouts in the river.” And he concludes his advice with a note of earthy practicality not to be found as the sport becomes more refined: a recipe for fresh trout boiled with beer and horseradish. It is excellent, by the way.

Here is a man who loves nothing more than that his friends should share his delight. In the gorge of the Dove he has made a private garden “with a delicate clear river about it.” where the world is reduced to its simplest and best essentials.

His masterpiece in translation, the Essays of M. de Montaigne (1685—1686, 1693, 1700, etc.), has often been reprinted, and still maintains its reputation; his other works include The Scarronides, or Virgil Travestie (1664—1670), a gross burlesque of the first and fourth books of the Aeneid, which ran through fifteen editions; Burlesque upon Burlesque, ... being some of Lucian's Dialogues newly put into English fustian (1675); The Moral Philosophy of the Stoicks (1667), from the French of Guillaume du Vair; The History of the Life of the Duke d'Espernon (1670), from the French of G Girard; the Commentaries (1674) of Blaise de Montluc; the Planter's Manual (1675), a practical book on arboriculture, in which he was an expert; The Wonders of the Peake (1681); the Compleat Gamester and The Fair one of Tunis, both dated 1674, are also assigned to Cotton.

If this sounds dry and unattractive to a modern ear, here is his epitaph for "M.H.", a prostitute (spacing, spelling and capitalization as originally printed):

Epitaph upon M.H

In  this cold Monument  lies one,That I know who has lain upon,The happier He : her Sight would charm,And Touch have kept King David  warm.Lovely, as is the dawning East ,Was this Marble's frozen Guest ;As soft, and Snowy, as that DownAdorns the Blow-balls  frizled Crown;As straight and slender as the Crest,Or Antlet  of the one beam'd Beast;Pleasant as th' odorous Month  of May :As glorious, and as light as Day .

Whom I admir'd, as soon as knew,And now her Memory pursueWith such a superstitious Lust,That I could fumble with her Dust.

She all Perfections had, and more,Tempting, as if design'd a Whore ,For so she was; and since there areSuch, I could wish them all as fair.

Pretty she was, and young, and wise,And in her Calling so precise,That Industry had made her proveThe sucking School-Mistress  of Love :And Death , ambitious to becomeHer Pupil , left his Ghastly home,And, seeing how we us'd her here,The raw-bon'd Rascal  ravisht her.

Who, pretty Soul, resign'd her Breath,To seek new Letchery in Death.

William Oldys contributed a life of Cotton to Hawkins's edition (1760) of the Compleat Angler. His Lyrical Poems were edited by J. R. Tutin in 1903, from an original edition of 1689. Cotton's translation of Montaigne was edited in 1892, and in a more elaborate form in 1902, by W. C. Hazlitt, who omitted or relegated to the notes the passages in which Cotton interpolates his own matter, and supplied Cotton's omissions.