He served in the U.S. Air Force between 1966—1969, then toured the Midwest and South playing guitar and singing in a rock band, and writing poetry. Bausch holds a B.A. from George Mason University, and an M.F.A. from the Iowa Writers' Workshop at the University of Iowa. He has taught English and Creative Writing at George Mason University and other institutions since 1980. He was previously Heritage Chair in Writing at George Mason University.

His novels vary from explorations of fear and love in family life, to character-rich historical novels, most notably Rebel Powers (1993), Good Evening Mr. & Mrs. America, and All the Ships at Sea (1996), Hello to the Cannibals (2002), and Peace (2008). He published his first short story in The Atlantic in April 1983: "All the Way in Flagstaff, Arizona" was initially an 800-page novel that he cut down, calling the process "like passing a kidney stone". He is a contributor of short stories to various periodicals, including Playboy, Harper's, Ploughshares, Esquire, The Atlantic, The Southern Review, and The New Yorker. His work has also been represented in anthologies, including O. Henry Prize Stories and Best American Short Stories.

Bausch received a National Endowment for the Arts grant in 1982, a Guggenheim Fellowship in 1984, the Hillsdale Prize of The Fellowship of Southern Writers in 1991, The Lila Wallace-Reader's Digest Writers' Award in 1992, the American Academy of Arts and Letters' Award in Literature in 1993, and membership of the Fellowship of Southern Writers in 1997. He became chancellor of the Fellowship in 2007. Take Me Back (1982) and Spirits and Other Stories (1987) were nominated for the PEN/Faulkner Award, and he received the 2004 PEN/Malamud Award. Two of his short stories, including "Belle Star", won the National Magazine Award for fiction. His story "Reverend Thornhill's Wife" won second place in the 2008 Fall Fiction Contest at Narrative Magazine. "Peace" won the 2009 Dayton Literary Peace Prize and the W.Y. Boyd Prize of American Library Association.

Bausch was born in 1945 in Fort Benning, Georgia. He is the twin brother of author Robert Bausch. Bausch previously lived in Virginia and now lives in Memphis, Tennessee where he is Moss Chair of Excellence at The University of Memphis.