Named for his father, a white German immigrant who was largely absent from the family, he later adopted his mother's last name. Wilson's early years were spent in the Hill District of Pittsburgh, a poor but lively neighbourhood that became the setting for most of his plays. Primarily self-educated, he quit school at age 15 after being accused of plagiarizing a paper. He later joined the black aesthetic movement in the late 1960s, became the cofounder and director of Black Horizons Theatre in Pittsburgh (1968), and published poetry in such journals as Black World (1971) and Black Lines (1972).

In 1978 Wilson moved to St. Paul, Minnesota, and in the early 1980s he wrote several plays, including Jitney (2000; first produced 1982). Focused on cab drivers in the 1970s, it underwent subsequent revisions as part of his historical cycle. His first major play, Ma Rainey's Black Bottom, opened on Broadway in 1984 and was a critical and financial success. Set in Chicago in 1927, the play centres on a verbally abusive blues singer, her fellow black musicians, and their white manager. Fences, first produced in 1985, is about a conflict between a father and son in the 1950s; it received a Tony Award for best play. Wilson's chronicle of the black American experience continued with Joe Turner's Come and Gone (1988), a play about the lives of residents of a boardinghouse in 1911; The Piano Lesson, set in the 1930s and concerning a family's ambivalence about selling an heirloom; and Two Trains Running (1992), whose action takes place in a coffeehouse in the 1960s. Seven Guitars (1996), the seventh play of the cycle, is set among a group of friends who reunite in 1948 following the death of a local blues guitarist.

Subsequent plays in the series are King Hedley II (2005; first produced 1999), an account of an ex-con's efforts to rebuild his life in the 1980s, and Gem of the Ocean (first produced 2003), which takes place in 1904 and centres on Aunt Ester, a 287-year-old spiritual healer mentioned in previous plays, and a man who seeks her help. Wilson completed the cycle with Radio Golf (first produced 2005). Set in the 1990s, the play concerns the fate of Aunt Ester's house, which is slated to be torn down by real-estate developers. Music, particularly jazz and blues, is a recurrent theme in Wilson's works, and its cadence is echoed in the lyrical, vernacular nature of his dialogue.

Wilson received numerous honours during his career, including seven New York Drama Critics' Circle Awards for best play. He also held Guggenheim and Rockefeller fellowships. Shortly after his death, the Virginia Theater on Broadway was renamed in his honour.