Hunter was born in Ballarat, a son of William and Francie Hunter. He had a brother, John, and a sister, Marie Ann. During his teens, Hunter was a champion swimmer, and briefly held a world record for the 100 yards freestyle until his record was broken by John Devitt in the very next heat ten minutes later. Hunter had qualified for the Australian swimming team in the 1956 Summer Olympics in Melbourne, Australia but a bout of meningitis ended his Olympic hopes. Hunter made his film debut as an extra in 1957 film The Shiralee. An introduction to Ava Gardner saw him gain a job as an extra and swimming double in the Hollywood film On the Beach, which was filming in Melbourne. Hunter claimed that he was inspired to take up acting after watching one of the leads (variously claimed to be either Gregory Peck or Fred Astaire) do 27 takes of a scene, and thinking he could do better. He took an intensive drama course in Melbourne, and then won a two-year scholarship to the prestigious Northampton Repertory Company in England. In 1966, he made his television debut in an uncredited role in two episodes of the Doctor Who serial The Ark. Returning to Australia in the 1960s, Hunter started out in television, and became a prolific performer in television and feature films, in which he often played the strong, opinionated, archetypal gruff Australian whose exterior belies a softer heart. Some of his most notable movie roles include Newsfront (1978), Gallipoli (1981), The Dismissal, Scales of Justice (1983), Strictly Ballroom (1992), Muriel’s Wedding (1994), The Adventures of Priscilla, Queen of the Desert (1994) and Australia (2008). In 2007, he reprised the role of Bob in the Australian touring stage production of Priscilla. He also provided the voice of the dentist in Finding Nemo (2003) and the voice of Bubo in Legend of the Guardians: The Owls of Ga’Hoole (2010). He portrayed United Nations Secretary General Spencer Chartwell in the American science fiction series Space: Above and Beyond. His last film role was in The Cup (2011). Of acting, Hunter said, “As long as the director told me where to stand and what to say, I was happy. Anyone who says there’s any more to it than that, is full of bullshit. … It’s a job. It is a craft, but there’s no art involved. What you need is common sense and a reasonably rough head. You put on the makeup and the wardrobe, and that is half the performance. That upsets the purists, but never mind, they don’t work as much as I do.”

Hunter’s first marriage was to Robbie Anderson from 1963 to 1973, with whom he had a son, named James Hunter. His next marriage was to actress Pat Bishop, in 1976. According to writer Bob Ellis, the marriage was short-lived after Hunter ran off with their marriage celebrant. His third marriage was to artist and television presenter Rhoda Roberts, from 1993 until their divorce in 1999. On 15 May 2011, Hunter was admitted to Caritas Christi hospice in Kew after refusing to go to hospital. Surrounded by family and friends, he died of liver cancer on 21 May 2011, aged 71. A memorial service for Hunter was held at Melbourne’s Princess Theatre on 26 May. Close friend and co-star Mick Molloy paid tribute to Bill Hunter on stage at the 54th Logie Awards in April 2012.