Gilbert was born in Colchester to Jerome Gilberd, a borough recorder. He was educated at St John's College, Cambridge. After gaining his MD from Cambridge in 1569, and a short spell as bursar of St John's College, he left to practice medicine in London and travelled on the continent. In 1573, he was elected a Fellow of the College of Physicians (not by that point granted a royal charter). In 1600 he was elected President of the College. From 1601 until his death in 1603, he was Elizabeth I's own physician, and James VI and I renewed his appointment.

His primary scientific work - much inspired by earlier works of Robert Norman - was De Magnete, Magneticisque Corporibus, et de Magno Magnete Tellure (On the Magnet and Magnetic Bodies, and on the Great Magnet the Earth) published in 1600. In this work, he describes many of his experiments with his model earth called the terrella. From these experiments, he concluded that the Earth was itself magnetic and that this was the reason compasses point north (previously, some believed that it was the pole star (Polaris) or a large magnetic island on the north pole that attracted the compass). He was the first to argue, correctly, that the centre of the Earth was iron, and he considered an important and related property of magnets was that they can be cut, each forming a new magnet with north and south poles.

The English word electricity was first used in 1646 by Sir Thomas Browne, derived from Gilbert's 1600 New Latin electricus, meaning "like amber". The term had been in use since the 13th century, but Gilbert was the first to use it to mean "like amber in its attractive properties". He recognized that friction with these objects removed a so-called effluvium, which would cause the attraction effect in returning to the object, though he did not realize that this substance (electric charge) was universal to all materials.

The electric effluvia differ much from air, and as air is the earth's effluvium, so electric bodies have their own distinctive effluvia; and each peculiar effluvium has its own individual power of leading to union, its own movement to its origin, to its fount, and to the body emitting the effluvium.

—De Magnete, English translation by Paul Fleury Mottelay, 1893

In his book, he also studied static electricity using amber; amber is called elektron in Greek, so Gilbert decided to call its effect the electric force. He invented the first electrical measuring instrument, the electroscope, in the form of a pivoted needle he called the versorium.

Like others of his day, he believed that "crystal" (quartz) was an especially hard form of water, formed from compressed ice:

Lucid gems are made of water; just as Crystal, which has been concreted from clear water, not always by a very great cold, as some used to judge, and by very hard frost, but sometimes by a less severe one, the nature of the soil fashioning it, the humour or juices being shut up in definite cavities, in the way in which spars are produced in mines.

—De Magnete, English translation by Silvanus Phillips Thompson, 1900

Gilbert argued that electricity and magnetism were not the same thing. For evidence, he (incorrectly) pointed out that, while electrical attraction disappeared with heat, magnetic attraction did not (although it is proven that magnetism does in fact become damaged and weakened with heat). It took Hans Christian Ørsted and James Clerk Maxwell to show that both effects were aspects of a single force: electromagnetism. Even then, Maxwell simply surmised this in his A Treatise on Electricity and Magnetism after much analysis. By keeping clarity, Gilbert's strong distinction advanced science for nearly 250 years.

Gilbert's magnetism was the invisible force that many other natural philosophers, such as Kepler, seized upon, incorrectly, as governing the motions that they observed. While not attributing magnetism to attraction among the stars, Gilbert pointed out the motion of the skies was due to earth's rotation, and not the rotation of the spheres, 20 years before Galileo (see external reference below). Gilbert made the first attempt to map the surface markings on the Moon in the 1590s. His chart, made without the use of a telescope, showed outlines of dark and light patches on the moon's face. Contrary to most of his contemporaries, Gilbert believed that the light spots on the Moon were water, and the dark spots land.

Gilbert died on 30 November 1603 in London. His cause of death is thought to have been the bubonic plague.