Born in Houston, Texas, Baker was educated at Princeton University, receiving a bachelor's degree in 1952. He then served in the United States Marine Corps for two years as a lieutenant, after which he attended the University of Texas School of Law, where he received his J.D in 1957. Baker became employed with the law firm Andrews & Kurth, where he remained until 1975.
He served as Undersecretary of Commerce under Gerald Ford in 1975 and ran Ford's unsuccessful re-election campaign in 1976. Baker ran an unsuccessful race to become State Attorney General of Texas in 1978.
After serving on Ronald Reagan's 1980 campaign staff, he was named White House Chief of Staff in 1981, serving in that capacity until 1985, when he was appointed Secretary of the Treasury. Baker also served on the Reagan administration's Economic Policy Council, where he was instrumental in achieving the passage of the administration's tax and budget reform legislation package in 1981.
Baker served on Reagan's National Security Council, and remained Treasury Secretary through 1988, during which year he also served as campaign chairman for Bush's successful presidential bid.
Bush appointed Baker Secretary of State in 1989, in which position he continued to serve through 1992, being awarded the Presidential Medal of Freedom in 1991. From 1992 to 1993 he was named Bush's Chief of Staff. He is credited as being a leading architect of the 31-nation alliance that fought alongside the United States in the first Gulf War.
Baker served as chief legal advisor for George W. Bush during the 2000 election campaign and oversaw the Florida recount. He is currently (as of 2003) senior counsel to the Carlyle Group. In late 2003 he was drafted by the President to assist in the operations of the US-led occupation of Iraq.
He and his wife, the former Susan Garrett, have eight children.