Wykeham evidently came from a very poor family. Wealthy patrons helped him obtain an education, and about 1356 he entered the service of King Edward III. By the mid-1360s he was the king's most trusted assistant. In 1367 he was made chancellor of England and bishop of Winchester, but he lost the former post (1371) in an anticlerical reaction led by the powerful John of Gaunt, duke of Lancaster. He then became a bitter opponent of Gaunt, who had assumed control of the government of the senile king Edward. Gaunt retaliated by hounding Wykeham with charges of corruption. The bishop received a royal pardon on the accession of King Richard II, whom he served as chancellor from 1389 to 1391.

Meanwhile, Wykeham was working to found his educational institutions. He built New College, beginning in 1380, and in 1382 he founded at Winchester a school (see Winchester College) to prepare boys for study at New College.