Graham was born in Greenock. In 1932, he left school to become an apprentice draughtsman and then studied structural engineering at Stow College, Glasgow. He was awarded a bursary to study literature for a year at Newbattle Abbey College in 1938. Graham spent the war years working at a number of jobs in Scotland and Ireland before moving to Cornwall in 1944. His first book, Cage Without Grievance was published in 1942.

The 1940s were prolific years for Graham, and he published four more books during that decade. These were The Seven Journeys (1944)' 2ND Poems (1945), The Voyages of Alfred Wallis (1948) and The White Threshold (1949). The style of these early poems led critics to see Graham as part of the neo-romantic group that included Dylan Thomas and George Barker. The affinities between these three poets derive from a common interest in poets like Gerard Manley Hopkins, Arthur Rimbaud and Hart Crane, and, in the cases of Thomas and Graham, a taste for the Bohemian lifestyle of the London literary scene.

In 1948, after spending a year on a reading touring of the United States, which included a small amount of teaching at New York University, he moved to London to be nearer the hub of that Bohemian world. Here he came into contact with T. S. Eliot, then editor of Faber and Faber who published The White Threshold and who were to remain Graham's publishers for the rest of his life.

In 1954, Graham returned to Cornwall to live near the St. Ives artists colony. Here he became friendly with several of the resident painters, including Bryan Wynter and Roger Hilton. The following year, Faber and Faber published his The Nightfishing, a book whose title poem is marked a dramatic change in Graham's poetry. The poem moved on from his earlier style and a move away from the neo-romantic/apocalyptic tag. Unfortunately for the poet, the poem's appearance coincided with the rise of the Movement with their open hostility to the neo-romantics, and, despite the support of Eliot and Hugh MacDiarmid, the book was neither a critical nor a popular success.

It was to be fifteen years before Graham published another book, Malcolm Mooney's Land (1970). This, and his last book, "Implements In Their Places" are a truly original and enduring poetic achievements, for which Graham is only slowly coming to be recognised.For many years, he had been living in semi-poverty on his income as a writer, but in 1974 he received a Civil List pension of £500 per year. Perhaps because of this alleviation of his financial circumstances, Graham began to publish with more frequency, with Implements in their Places (1977), Collected Poems 1942-1977 (1979) and an American-published Selected Poems (1980). He died in Madron, Cornwall in 1986. His last collection Aimed at Nobody was published posthumously in 1993 and a book of Uncollected Poems appeared in 1990. Faber brought out a new Selected Poems in 1996. The Nightfisherman: Selected Letters was published in 1999 and New Collected Poems in 2005.

As this posthumous publication activity indicates, Graham's reputation has grown in recent years. Some might argue this is partly due to Harold Pinter's often-expressed enthusiasm for the poet, or attribute his increasing recognition to the widespread advocacy of poets associated with the British Poetry Revival. However Graham's work was represented in the anthology Conductors of Chaos (1996) by a selection introduced by the poet and critic Tony Lopez, who also wrote a book-length study, The Poetry of W. S. Graham (1989).

He married another poet, Agnes Kilpatrick Dunsmuir (1909-1999), known as "Nessie Dunsmuir". He died on 9 January 1986.

In 2006, 20 years after his death, memorial plaques were unveiled in Fore Street Madron where he spent his final years, and at his birthplace, 1 Hope St Greenock.