Next to Muddy Waters, he was the most influential person in shaping the post World War II sound of the Chicago blues. He also was an important link between the blues and rock and roll, working with Chuck Berry and Bo Diddley in the late 1950s. His songs were covered by some of the biggest artists of more recent times, including Bob Dylan, Cream, Jimi Hendrix, Led Zeppelin, Foghat, The Yardbirds, The Rolling Stones, Queen, Oingo Boingo, Megadeth, The Doors, Etta James, The Allman Brothers Band, Aerosmith, Grateful Dead, and Styx.

Dixon was born in Vicksburg, Mississippi on July 1, 1915. His mother Daisy often rhymed the things she said, a habit her son imitated. At the age of seven, young Dixon became an admirer of a band that featured pianist Little Brother Montgomery. Dixon was first introduced to blues when he served time on prison farms in Mississippi as an early teenager. He later learned how to sing harmony from local carpenter Leo Phelps. Dixon sang bass in Phelps' group The Jubilee Singers, a local gospel quartet that regularly appeared on the Vicksburg radio station WQBC. Dixon began adapting poems he was writing as songs, and even sold some tunes to local music groups.

Dixon left Mississippi for Chicago in 1936. A man of considerable stature, at 6 and a half feet and weighing over 250 pounds, he took up boxing; he was so successful that he won the Illinois State Golden Gloves Heavyweight Championship (Novice Division) in 1937. Dixon turned professional as a boxer and worked briefly as Joe Louis' sparring partner. After four fights, Dixon left boxing after getting into a fight with his manager over being cheated out of money.

Dixon met Leonard Caston at the boxing gym where they would harmonize at times. Dixon performed in several vocal groups in Chicago but it was Caston that got him to pursue music seriously. Caston built him his first bass, made of a tin can and one string. Dixon's experience singing bass made the instrument familiar. He also learned the guitar.

In 1939, Dixon was a founding member of the Five Breezes, with Caston, Joe Bell, Gene Gilmore and Willie Hawthorne. The group blended blues, jazz, and vocal harmonies, in the mode of the Ink Spots. Dixon's progress on the Upright bass came to an abrupt halt during the advent of World War II when he resisted the draft as a conscientious objector and was imprisoned for ten months. After the war, he formed a group named the Four Jumps of Jive and then reunited with Caston, forming the Big Three Trio, who went on to record for Columbia Records.

Dixon signed with Chess Records as a recording artist, but began performing less, being more involved with administrative tasks for the label. By 1951, he was a full-time employee at Chess, where he acted as producer, talent scout, session musician and staff songwriter. He was also a producer for Chess subsidiary Checker Records. His relationship with Chess was sometimes strained, although he stayed with the label from 1948 to the early 1960s. During this time Dixon's output and influence were prodigious. From late 1956 to early 1959, he worked in a similar capacity for Cobra Records, where he produced early singles for Otis Rush, Magic Sam, and Buddy Guy. He later recorded on Bluesville Records. From the late 1960s until the middle 1970s, Dixon ran his own record label, Yambo Records, along with two subsidiary labels, Supreme and Spoonful. He released his 1971 album Peace? on Yambo, as well as singles by McKinley Mitchell, Lucky Peterson and others.

Dixon is considered one of the key figures in the creation of Chicago blues. He worked with Chuck Berry, Muddy Waters, Howlin' Wolf, Otis Rush, Bo Diddley, Joe Louis Walker, Little Walter, Sonny Boy Williamson, Koko Taylor, Little Milton, Eddie Boyd, Jimmy Witherspoon, Lowell Fulson, Willie Mabon, Memphis Slim, Washboard Sam, Jimmy Rogers, Sam Lay and others. His double bass playing was of a high standard. He appears on many of Chuck Berry's early recordings, further proving his linkage between the blues and the birth of rock and roll.

Dixon is remembered mainly as a songwriter; his most enduring gift to the blues lay in refurbishing archaic Southern motifs, often of magic and country folkways and often derived from earlier records such as those by Charlie Patton, in contemporary arrangements, to produce songs with both the sinew of the blues, and the agility of pop. British R&B bands of the 1960s constantly drew on the Dixon songbook for inspiration. In December 1964, The Rolling Stones reached No. 1 in the UK Singles Chart with their cover version of Dixon's "Little Red Rooster". By the late sixties, Dixon's songwriting and production work began to take a back seat to his organizational abilities, which were utilised to assemble all-star, Chicago-based blues ensembles for work in Europe.

In his later years, Willie Dixon became a tireless ambassador for the blues and a vocal advocate for its practitioners, founding the Blues Heaven Foundation. The organization works to preserve the blues’ legacy and to secure copyrights and royalties for blues musicians who were exploited in the past. Speaking with the simple eloquence that was a hallmark of his songs, Dixon claimed, "The blues are the roots and the other musics are the fruits. It’s better keeping the roots alive, because it means better fruits from now on. The blues are the roots of all American music. As long as American music survives, so will the blues." In 1977, unhappy with the royalties rate from ARC Music, he and Muddy Waters sued the Chess-owned publishing company, and with the proceeds from the lawsuit set up Hoochie Coochie Music. In 1987, Dixon received an out-of-court settlement from Led Zeppelin after suing them for plagiarism, in relation to their use of his music for Bring it on Home and his lyrics from his composition You Need Love (1962) for their track Whole Lotta Love.

Dixon's health deteriorated increasingly during the seventies and the eighties, primarily due to long-term diabetes. Eventually one of his legs had to be amputated. Dixon was inducted at the inaugural session of the Blues Foundation's ceremony, and into the Blues Hall of Fame in 1980. In 1989 he was also the recipient of a Grammy Award for his album, Hidden Charms.

Dixon died of heart failure in Burbank, California on January 29, 1992, and was buried in the Burr Oak Cemetery in Alsip, Illinois. Dixon was posthumously inducted into the Rock and Roll Hall of Fame in the "early influences" (pre-rock) category in 1994.

Actor and comedian Cedric the Entertainer portrayed Dixon in Cadillac Records, a 2008 film based on the early history of Chess Records.

In 2009, Alex Dixon, Willie Dixon's grandson, released his debut album, Rising From the Bushes.

With Sam Lazar