Proxmire graduated from The Hill School (in Pottstown, Pennsylvania) in 1933, Yale University in 1938, Harvard Business School in 1940, and Harvard Graduate School of Public Administration in 1948.

During World War II he served as a member of the Military Intelligence Service. After getting his second master's degree, Proxmire moved to Wisconsin to be a reporter for The Capital Times in Madison and to stake out a political career in a favorable state. "They fired me after I'd been there seven months, for labor activities and impertinence," he once said.

In 1946, he married Elsie Rockefeller, a great-granddaughter of William Rockefeller, brother and partner of oil magnate John D. Rockefeller. They had two children, Theodore, who lives in Bethesda, Maryland, and Elsie Proxmire Zwerner, of Scottsdale, Arizona. Elsie Proxmire received an uncontested divorce in 1955. She later married Miles J. McMillin, who had worked with Proxmire as the editor and publisher of The Capital Times. McMillin shot Elsie to death in December 1982.

In 1956, Proxmire married Ellen Hodges Sawall, who brought two children of her own to the marriage, Mary Ellen Poulos, now of Milwaukee, Wisconsin and Jan Licht, now of Naperville, Illinois. Together, the couple had two sons, William, who died in infancy, and Douglas, who lives in McLean, Virginia. Nine grandchildren survive Proxmire.

He was also known for his personal fitness, which included jogging and push-ups, so earning him the moniker "Push Up". In 1973, he published a book about staying in shape, entitled You Can Do It: Senator Proxmire's Exercise, Diet and Relaxation Plan. After leaving Congress, Proxmire had an office in the Library of Congress.

After a battle with Alzheimer's disease, Proxmire died in a nursing home, where he had lived for more than four years, in Sykesville, Maryland, on December 15, 2005, aged 90.

Proxmire served as a member of the Wisconsin State Assembly from 1951 to 1952, and was an unsuccessful candidate for Governor of Wisconsin in 1952, 1954 and 1956. Proxmire was elected, in a special election on August 28, 1957, to fill the remainder of the term vacated due to the death of Senator Joseph McCarthy, on May 2, 1957. He was reelected in 1958, 1964, 1970, 1976 and 1982. His re-elections were always by wide margins, including 71% of the vote in 1970, 73% in 1976 and 65% in 1982, when he ran for a fifth six-year term.

Proxmire holds the U.S. Senate record for consecutive roll call votes cast: 10,252 between April 20, 1966 and October 18, 1988. The previous record of 2,941 was held by Sen. Margaret Chase Smith of Maine.

Proxmire served as the Chair of the Committee on Banking, Housing and Urban Affairs from 1975 to 1981 and again from 1987 to 1989.

He was an early, outspoken critic of the Vietnam War. He frequently criticized Presidents Lyndon Johnson and Richard Nixon for their conduct of the war and foreign policy decisions. He used his seat on the Senate Armed Services Committee to spotlight wasteful military spending and was instrumental in stopping frequent military pork barrel projects. His Golden Fleece Award was created to focus media attention on projects he felt were self-serving and wasted taxpayer dollars. He was also head of the campaign to cancel the American supersonic transport. Despite his support of budgetary restraint in other areas, he normally sided with dairy interests and was a proponent of dairy price supports.

As Chairman of the Committee on Banking, Housing and Urban Affairs, Proxmire was instrumental in devising the financial plan that saved New York City from bankruptcy in 1976—77.

In his last two Senate campaigns of 1976 and 1982, Proxmire refused to take any campaign contributions, and on each spent less than $200 out of his own pocket ... to cover the expenses related to filing for re-election and return postage for unsolicited contributions. He was an early advocate of campaign finance reform.

Proxmire was famous for issuing his Golden Fleece Awards, which identified what he considered wasteful government spending, between 1975 and 1988. The first was awarded in 1975 to the National Science Foundation, for funding an $84,000 study on why people fall in love. Other Golden Fleece awards over the years were "awarded" to the Justice Department for conducting a study on why prisoners wanted to get out of jail, the National Institute of Mental Health to study a Peruvian brothel ("The researchers said they made repeated visits in the interests of accuracy," reported the New York Times), and the Federal Aviation Administration, for studying "the physical measurements of 432 airline stewardesses, paying special attention to the 'length of the buttocks.'" Proxmire was successful in stopping numerous science and academic projects which were, in his opinion, of dubious value.

Proxmire's critics claimed that some of his awards went to basic science projects that led to important breakthroughs, such as the Aspen Movie Map. For example, Proxmire was criticized in 1989 for the Aspen Movie Map incident by author Stewart Brand, who accused Proxmire of recklessly attacking legitimate research for the crass purpose of furthering his own political career, with gross indifference as to whether his assertions were true or false as well as the long-term effects on American science and technology policy. Proxmire later apologized for several of those, including SETI.

One winner of the Golden Fleece Award, Ronald Hutchinson, was so outraged that he sued Proxmire for defamation in 1976. Proxmire claimed that his statements about Hutchinson's research were protected by the Speech or Debate Clause of the U.S. Constitution. The U.S. Supreme Court ruled that that clause does not immunize members of Congress from liability for defamatory statements made outside of formal congressional proceedings (Hutchinson v. Proxmire, ). The case was later settled out of court.

Proxmire earned the unending enmity of space advocates and science fiction fandom for his opposition to space colonization, ultimately eliminating spending on said research from NASA's budget. In response to a segment about space colonies run by the CBS program 60 Minutes, Proxmire stated that; "it's the best argument yet for chopping NASA's funding to the bone .... I say not a penny for this nutty fantasy". Arthur C. Clarke and Larry Niven retaliated by respectively writing the award winning stories Death and the Senator and The Return of William Proxmire. In a number of circles his name has become a verb, meaning to unfairly obstruct scientific research for political gain.

From 1967 until 1986, Proxmire gave daily speeches noting the necessity of ratifying The Convention on the Prevention and Punishment of the Crime of Genocide. After giving this speech every day that the Senate was in session for 20 years, resulting in 3,211 speeches, the convention was ratified by the U.S. Senate by a vote on 83—11 on February 11, 1986.