Born in Gower Street, London, the son of the distinguished mathematician Augustus De Morgan and his highly educated wife, De Morgan was always supported in his desire to become an artist. At the age of twenty he entered the Royal Academy schools, but he was swiftly disillusioned with the establishment; then he met Morris, and through him the Pre-Raphaelite circle. Soon De Morgan began experimenting with stained glass, ventured into pottery in 1863, and by 1872 had shifted his interest wholly to ceramics.

In 1872, De Morgan set up a pottery works in Chelsea where he stayed through 1881 ... his most fruitful decade as an art potter. The arts and crafts ideology he was exposed to through his friendship with Morris and his own insistent curiosity, led De Morgan to begin to explore every technical aspect of his craft. He soon rejected the use of blank commercial tiles, preferring to make his own biscuit, which he admired for its irregularities and better resistance to moisture. His inventive streak led him to spend hours designing a new duplex bicycle gear and also lured him into complex studies of the chemistry of glazes, methods of firing, and pattern transfer.

De Morgan was particularly drawn to Eastern tiles. Around 1873—1874, he made a striking breakthrough by rediscovering the technique of lustre ware (characterized by a reflective, metallic surface) found in Hispano-Moresque pottery and Italian maiolica. Nor was his interest in the East limited to glazing techniques, but it permeated his notions of design and colour, as well. As early as 1875, he began to work in earnest with a "Persian" palette: dark blue, turquoise, manganese purple, green, Indian red, and lemon yellow, Study of the motifs of what he referred to as "Persian" ware (and what we know today as fifteenth-and-sixteenth century ?znik ware), profoundly influenced his unmistakable style, in which fantastic creatures entwined with rhythmic geometric motifs float under luminous glazes.

The pottery works was always beset by financial problems, despite repeated cash injections from his wife, the pre-Raphaelite painter Evelyn Pickering de Morgan, and a partnership with the architect Halsey Ricardo. This partnership was associated with a move for the factory from Merton Abbey to Fulham in 1888. During the Fulham period De Morgan mastered many of the technical aspects of his work that had previously been elusive, including complex lustres and deep, intense underglaze painting that did not run during firing. However, this did not guarantee financial success, and in 1907 William De Morgan left the pottery, which continued under the Passenger brothers, the leading painters at the works. "All my life I have been trying to make beautiful things," he said at the time, "and now that I can make them nobody wants them."

William De Morgan turned his hand to writing novels, and became better known than he ever had been for his pottery. His first novel, Joseph Vance, was published in 1906, and was an instant sensation in the United States as well as the United Kingdom. This was followed by An Affair of Dishonour, Alice-for-Short, and It Never Can Happen Again. The genre has been described as 'Victorian and suburban'.

William De Morgan died in London in 1917, of trench fever, and was buried in Brookwood Cemetery. Recollections of William De Morgan praise him both for his personal warmth and the indomitable energy with which he pursued his kaleidoscopic career as designer, potter, inventor and novelist.

Collections of De Morgan's work exist in many museums, including the Victoria and Albert Museum, and the William Morris Gallery in London, a substantial and representative collection in Birmingham, and a small but well-chosen collection along with much other pottery at Norwich. His dragon charger is in the Dunedin Public Art Gallery in New Zealand.