McGraw was born in Vinita, Oklahoma, the son of Jerry (née Stevens) and Joe McGraw. He grew up with two older sisters, Deana and Donna, and younger sister Brenda in the oilfields of North Texas where his father was an equipment supplier. During McGraw's childhood, his family moved so his father could pursue a lifelong dream of becoming a psychologist. McGraw attended Shawnee Mission North High School in Overland Park, Kansas. In 1968, he was awarded a football scholarship to the University of Tulsa, where he played middle linebacker under Coach Glenn Dobbs. On November 23 of that year McGraw's team lost to the University of Houston 100—6, which is one of the most lopsided games in college football history. Coach Dobbs retired after that season, and McGraw transferred to Midwestern State University in Wichita Falls, Texas.

McGraw graduated in 1975 from Midwestern State University with a Bachelor of Arts degree in psychology. He went on to earn a master's degree in experimental psychology in 1976, and a Ph.D in clinical psychology in 1979 at the University of North Texas, where his dissertation was titled " Rheumatoid Arthritis: A Psychological Intervention." After run-ins with several faculty members, McGraw was guided through the doctoral program by Frank Lawlis who later became the primary contributing psychologist for the Dr. Phil television show.

McGraw owned a construction business with his brother-in-law while completing his internship for his Ph.D.

After obtaining his Ph.D., McGraw joined his father, Dr. Joe McGraw, in Wichita Falls, Texas, where the elder McGraw had established his private psychology practice.

In 1983, McGraw and his father joined Thelma Box, a successful Texas businesswoman, in presenting "Pathways" seminars, "an experience-based training which allows individuals to achieve and create their own results." Critics claim that many of the "phrases and the terminology and the quaint sayings" used by McGraw on the Oprah and Dr. Phil shows were coined by Box and presented by McGraw in this seminar. McGraw admits that some of the material from Life Strategies, his first best-seller, is taken directly from the Pathways seminar. However, he has never mentioned Thelma Box or her contributions to his success in any of his books or TV shows. Eight years after joining Box, McGraw signed an agreement for the sale of his Pathways seminar stock for $325,000 without notifying either his father or Thelma Box of the impending sale. "There was a feeling of betrayal because Phil had compromised the integrity of the program. The accusation is that he reduced Box's asset value in the corporation by selling behind her back." Box founded her own seminars entitled "Choices." It has been reported that McGraw and his father seldom speak.

Texas State Board of Examiners of Psychologists

The Texas State Board of Examiners of Psychologists determined on October 21, 1988 that McGraw had hired a former patient for "part-time temporary employment". Specifically the Board cited "a possible failure to provide proper separation between termination of therapy and the initiation of employment" and issued a letter of reprimand and imposed administrative penalties. The Board also investigated claims made by the patient of inappropriate contact initiated by McGraw, but the "Findings of Fact" document issued by the Board on October 21, 1988, at the end of its investigation, includes no reference to any physical contact of any kind. It specifically identified the "the therapeutic and business relationships" as constituting McGraw's sole issue with the Board. McGraw fulfilled all terms of the Board's requirements, and the Board closed its complaint file in June, 1990.

In 1990, McGraw joined lawyer Gary Dobbs in co-founding Courtroom Sciences Inc. (CSI), a trial consulting firm through which McGraw later came into contact with Oprah Winfrey. Eventually, CSI became a profitable enterprise, advising Fortune 500 companies and injured plaintiffs alike in achieving settlements. McGraw is no longer an officer or director of the company.

After starting CSI, McGraw ceased the practice of psychology. He maintained his license current and in good standing until he elected to retire it 15 years later in 2006. Appearing on the Today Show in January 2008, McGraw said that he has made it "very clear" that his current work does not involve the practice of psychology. He also said that he had "retired from psychology". According to the Today Show, the California Board of Psychology determined in 2002 that he did not require a license because his show involves "entertainment" rather than psychology.

Oprah Winfrey and the Dr. Phil show

In 1995, Oprah Winfrey hired McGraw's legal consulting firm CSI to prepare her for the Amarillo Texas beef trial. Winfrey was so impressed with McGraw that she thanked him for her victory in that case, which ended in 1998. Soon after, she invited him to appear on her show. His appearance proved so successful that he began appearing weekly as a "Relationship and Life Strategy Expert" on Tuesdays starting in April 1998.

The next year, McGraw published his first best-selling book, Life Strategies, some of which was taken from the "Pathways" seminar. In the next four years, McGraw published three additional best-selling relationship books, along with workbooks to complement them.

As of September 2002, McGraw formed Peteski Productions and launched his own syndicated daily television show, Dr. Phil, produced by Winfrey's Harpo Studios. The format is an advice show, where he tackles a different topic on each show, offering advice for his guests' troubles.

Weight loss products

In 2003, McGraw entered the weight-loss business, selling shakes, energy bars, and supplements. These products were promoted on his show with his sisters Deana and Brenda and nephew Tony among the featured testimonials on the show. These products' labels, which carried the brand name "Shape It Up, Woo, Woo!", stated: "These products contain scientifically researched levels of ingredients that can help you change your behavior to take control of your weight." This met with swift criticism from various sources, accusing McGraw (a clinical psychologist, and not a physician) of lacking the expertise to recommend weight-loss products. Facing a Federal Trade Commission investigation into Shape Up's claims, McGraw pulled his supplements off the market in March 2004, and the FTC dropped its probe. In October 2005, several people who used McGraw's products declared an intent to file a class-action lawsuit against him, claiming that although the supplements cost $120 per month they did not stimulate weight loss.McGraw settled the suit in September 2006 for $10.5 million.Some of the settlement ($6 million) may be paid to the plaintiffs in the form of Amway (Quixtar) brand Nutrilite vitamins.

The Making of Dr. Phil unauthorized biography (2003)

The Making of Dr. Phil is a biography by Sophia Dembling, a reporter from the Dallas Morning News, and Lisa Gutierrez, a reporter from The Kansas City Star. The book probed McGraw's history, with interviews of his childhood friends and former classmates. The book reported that McGraw allegedly used unethical business practices in a gym business early in his career, that he was allegedly abusive to his first wife, and was also allegedly abusive to his staff, while noting that he overcame adversity through setting goals and was persistent in achieving success. The book received no promotional help from McGraw or his associates.

In 2005, McGraw published another best-selling book, Family First, along with a workbook. He also signed a five-year extension of his syndication deal with his show's distributors, King World Productions, Inc. The deal will pay McGraw $15 million a year and keep the show in production through the 2013—2014 television season.

Spin-off shows

Also in 2005, McGraw's son Jay's television show Renovate My Family (a clone of ABC's Home Edition) was canceled at the start of its second season following a renovated family's lawsuit. Jay McGraw and Dr. Phil then formed Stage 29 Productions. A week later, McGraw and son announced a new show called Moochers (a clone of ABC's Kicked Out); however, the show was canceled before any episodes aired. McGraw also released another book, Love Smart, which did not achieve the success of his previous bestsellers.

In 2006, the Dr. Phil House (a clone of CBS's Big Brother) began airing as part of the Dr. Phil television show. Following a protest by neighbors, the house in Los Angeles was shut down, and production resumed on a sound stage in a studio back lot. McGraw reached the number 22 spot on the Forbes Celebrity 100 list, with income of $45 million.

Another Stage 29 show, Decision House (a remix of the Dr. Phil House) aired from September through November, 2007 but was canceled due to poor reviews and dismal ratings. Ratings for the Dr. Phil show in 2007 began to slide. In May, viewership was close to 7 million people. However, by year's end, viewership was about 5.5 million people (#10 for syndicated TV shows, and just under Everybody Loves Raymond, Family Guy and Miami). By August 2008, viewership slipped to just over 4 million people. Two weeks later, the show slipped beneath the Nielsen top 12 syndicated TV shows, and has yet to resurface. McGraw's income fell by 1/3 to $30 million, and he dropped to the number 30 spot on the Forbes Celebrity 100 list.

Late in 2007, McGraw began promoting his 2008 Dr. Phil Show extension, The Doctors. The show is hosted by television personality and ER physician Dr. Travis Stork (The Bachelor). Other experts scheduled to appear include various personalities who have appeared on the Dr. Phil show over the years, such as Dr. Lisa Masterson, an obstetrician/gynecologist; Dr. Andrew Ordon, a plastic surgeon; and Dr. Jim Sears, a pediatrician. Masterson, Ordon, and Sears appeared on the Dr. Phil show during the 2007—08 season so that McGraw could instruct them on "how to give articulate medical advice while being scrutinized by a studio audience in Los Angeles." Jay McGraw (Dr. Phil's eldest son) is executive producer of the show. The Doctors debuted on September 8, 2008, and as of November 10, 2008, had a 2.0 rating.

Kalpoe lawsuit (2006)

McGraw was named a co-defendant, along with CBS Television, in a 2006 lawsuit filed in relation to the disappearance of Natalee Holloway. The lawsuit was filed by Deepak Kalpoe and his brother Satish Kalpoe, who claimed that an interview they did with McGraw, aired in September 2005, was "manipulated and later broadcast as being accurate, and which portrays Deepak Kalpoe and Satish Kalpoe 'as engaging in criminal activity against Natalee Holloway and constitutes defamation.'" The Kalpoe brothers claimed invasion of privacy, fraud, deceit, defamation, emotional distress, and civil conspiracy in the suit, which was filed in the Los Angeles Superior Court.

Britney Spears "intervention" (2008)

In January, 2008, McGraw visited entertainer Britney Spears in her hospital room. The visit by McGraw drew criticism from the Spears family and from mental health professionals.

The visit appeared to be part of an attempt at getting Spears and her parents to take part in an "intervention" on the Dr. Phil television show. Immediately after the visit, McGraw issued public statements about Spears' situation that Spears' family spokeswoman Lou Taylor said violated their family trust in McGraw. "This is another example of a trust being betrayed", Taylor told Today co-host Meredith Vieira. "Rather than helping the family’s situation, the celebrity psychologist caused additional damage", she said. Several mental health care professionals criticized McGraw for his actions; however, fellow TV psychologist Dr. Joyce Brothers defended McGraw. It was reported that a psychologist filed a complaint with the California Board of Psychology (BOP), alleging that McGraw had practiced psychology without a license and had violated doctor-patient privilege by discussing Spears' case with the media. A copy of the complaint appeared in the media, but there is no way to verify whether or not it was actually submitted to the BOP. The BOP does not disclose that information unless an investigation is opened. Dr. Martin Greenberg, a former BOP President said on the Today Show that this incident was not a matter that the law covers or would be concerned about.

Polk County, Florida controversy (2008)

On April 13, 2008, a producer for the Dr. Phil show secured $30,000 bail for the ringleader of a group of eight teenage girls who viciously beat another girl and videotaped the attack. The teen had been booked at the Polk County, Florida jail on charges that included kidnapping and assault. Producers of the Dr. Phil show had made plans to tape a one-hour show devoted to the incident and had sent a production assistant to Orlando to help book guests for the show. However, when news broke that the Dr. Phil show producer had posted bail for the teen, the outcry caused the show to cancel their plans. "In this case certain staffers went beyond our guidelines," said Theresa Corigliano, spokesperson for the Dr. Phil show. "We have decided not to go forward with the story as our guidelines have been compromised."

Riccio lawsuit (2008)

McGraw was sued by Thomas Riccio, the memorabilia collector responsible for taping the Las Vegas robbery that led to OJ Simpson being convicted. Riccio sued McGraw in Los Angeles Superior Court for defamation, fraud, intentional infliction of emotional distress and false light for what Riccio claims to have been deceitful editing of the Dr. Phil Show on which he appeared in early October 2008.

McGraw's advice and methods have drawn criticism from some fellow psychotherapists as well as from some laymen. McGraw's critics regard advice given by him to be at best simplistic, and at worst, ineffective.McGraw said in a 2001 South Florida newspaper interview that he never liked traditional one-on-one counseling, and that "I'm not the Hush-Puppies, pipe and 'Let's talk about your mother' kind of psychologist.'"

McGraw announced the formation of the Dr. Phil Foundation, which raises funds to fight childhood obesity, on October 22, 2003. The Foundation also supports charitable organizations that help address the emotional, spiritual and monetary needs of many children and families.

McGraw married his first wife, an ex-cheerleader and homecoming queen named Debbie Higgins McCall, in 1970, when he was 20 years old. According to her, McGraw was domineering and would not allow her to participate in the family business. She claimed that she was confined to domestic duties, which included lifting weights to improve her bustline.

During the process of annulling the marriage in 1973, McGraw began dating a 19-year old who graduated a year late from high school the week before they met: McGraw was 23 years old at the time. Robin Jo Jameson, whom he married three years later. After the McGraws' first child Jay was born in 1979, she became a homemaker. In 1986, McGraw's second child, Jordan, was born.

McGraw's son, Jay McGraw, has partially followed in his father's footsteps, publishing books aimed at teenagers based on McGraw's books and working for Stage 29. Jay McGraw became engaged to Erica Dahm, one of the famous Playboy Playmate triplets. McGraw, who has been an outspoken critic of pornography, was best man at his son's wedding, which was held at his home in Beverly Hills.

McGraw is also a private pilot, with an instrument rating, flying single engine airplanes.