He was a US Naval Academy graduate in 1936. His first appointment was as the junior officer of a river gunboat on the Yangtze River.

His best selling work, 1958's The Ugly American, was one of several novels co-written with Eugene Burdick. Disillusioned with the style and substance of America's diplomatic efforts in Southeast Asia, Lederer and Burdick openly sought to demonstrate their belief that American officials and civilians could make a substantial difference in Southeast Asian politics if they were willing to learn local languages, follow local customs and employ regional military tactics. However, if American policy makers continued to ignore the logic behind these lessons, Southeast Asia would fall under Soviet or Chinese Communist influence.

In A Nation of Sheep, Lederer identified intelligence failures in Asia. In "Government by Misinformation" he investigates the sources he believes lead to American foreign policy:

• Trusted local officials.
• Local (foreign) newspapers, magazines, books, radio broadcasts, etc.
• Paid local informers.
• Personal observations by U.S. officials.
• American journalists.

Other works were intended to be light-hearted and humorous fantasies. His early work, Ensign O'Toole and Me is both. A children's book, Timothy's Song, with illustrations by Edward Ardizzone, appeared in 1965.

William Lederer rose to the rank of Navy Captain. The source for this is his own statement in Our Own Worst Enemy discussing being assigned as a Special Assistant to Commander in Chief, Pacific Fleet. (pg 54, W.W. Norton & Company, Inc, 1968).

A piece of history related in Our Own Worst Enemy is the story of Lederer as a young Navy Lieutenant, Junior Grade, having a chance meeting in 1940 with a Jesuit priest, Father Pierre Cogny, and his Vietnamese assistant, "Mr. Nguyen", while waiting out a Japanese bombing raid in China. Father Pierre asked Lederer if he had a copy of the United States Declaration of Independence on his gunboat, and Lederer said that he did and provided them with a copy. "Mr. Nguyen" later became better known as Ho Chi Minh, the Vietnamese Communist revolutionary and statesman who served as prime minister (1946—1955) and president (1945—1969) of the Democratic Republic of Vietnam (North Vietnam). The 1945 Proclamation of Independence of the Democratic Republic of Vietnam, written by Ho Chi Minh, begins by quoting from the American document.

Lederer died December 5, 2009, of respiratory failure at the age of 97.