Thompson received a bachelor's degree in political science (1963) and a law degree (1966) from the University of Wisconsin. After graduating from law school, he entered the U.S. Army Reserve and successfully campaigned for a seat in the Wisconsin State Assembly. He served as a state representative for the next 20 years, and he was elected minority leader in 1981. Thompson's legislative term ended with his election as governor of Wisconsin in 1986.

Thompson was the longest-serving governor in the state's history, winning reelection to an unprecedented fourth term in 1998. During his governorship, he focused on improving the state's economy and expanding access to public services. His Wisconsin Works program reduced the number of people on the state's welfare rolls by more than 90 percent, and it earned praise from both ends of the political spectrum. In 1999 he launched BadgerCare, a federally subsidized health insurance scheme that provided medical coverage to low-income families.

The success of these and other programs led to Thompson's appointment as secretary of health and human services in the cabinet of Pres. George W. Bush (Bush, George W.) in 2001. From 2003 to 2005 Thompson served as chairman of the Global Fund to Fight AIDS, Tuberculosis and Malaria. His 2008 presidential campaign platform emphasized health care reform, education, tax cuts, and his extensive experience in government. He dropped out of the race in August 2007 after a disappointing finish in the Iowa straw poll.