Bix Beiderbecke was born on March 10, 1903, in Davenport, Iowa, the youngest of three children of Bismark Herman Beiderbecke, a coal and lumber merchant of German descent, and Agatha Jane Hilton, a church organist whose father had captained Mississippi riverboats. Sources disagree on whether his given name was Leon Bismark or Leon Bix; his family called him Bix either way. He played piano by ear from the age of two or three. His brother Burnie came home from stateside service at the end of 1918 with a phonograph and records by the Original Dixieland Jazz Band, and the cornet lines of its leader Nick LaRocca became the model from which Bix taught himself the cornet, an approach that left him with an unorthodox fingering he kept for life. He attended Davenport High School from 1918 to 1921, played dance jobs with local bands, and in September 1921 was sent to Lake Forest Academy north of Chicago, where he spent evenings in Chicago clubs listening to the New Orleans Rhythm Kings at Friar's Inn and to King Oliver's Creole Jazz Band, with Louis Armstrong on second cornet. The school expelled him in May 1922 for poor grades and drinking.

He worked the Lake Michigan excursion boats with the Cascades Band in the summer of 1922 and joined the Wolverine Orchestra late in 1923, a seven-man group that took its name from Jelly Roll Morton's "Wolverine Blues." The Wolverines made their first records for Gennett in Richmond, Indiana, on February 18, 1924, cutting "Fidgety Feet" and "Jazz Me Blues," and recorded fifteen sides for the label that year, among them Hoagy Carmichael's "Riverboat Shuffle" on May 6, a tune Carmichael wrote for the band after inviting it to play at Indiana University. Bix left the group in the autumn of 1924 for Jean Goldkette's orchestra in Detroit, but his limited sight-reading and the objections of Victor's musical director to his modern style ended that stay within weeks. On January 26, 1925, he led his first session, as Bix and His Rhythm Jugglers, for Gennett, recording "Toddlin' Blues" and his own "Davenport Blues." A February 1925 stint at the University of Iowa also ended within weeks.

That summer he worked with the C-melody saxophonist Frankie Trumbauer in a Goldkette-run band, and for the rest of the decade the two were inseparable, with Trumbauer acting as a guardian. They played the Arcadia Ballroom in St. Louis, joined Goldkette's main orchestra in the spring of 1926 at Detroit's Graystone Ballroom, and on October 12, 1926, were declared winners of a "battle of the bands" against Fletcher Henderson's orchestra at New York's Roseland Ballroom. The year 1927 produced his most celebrated records. For OKeh he recorded "Singin' the Blues" and "Clarinet Marmalade" under Trumbauer's name on February 4, with guitarist Eddie Lang, followed in May by "I'm Coming, Virginia" and "Way Down Yonder in New Orleans," and on September 9 he recorded his piano solo "In a Mist," the only one of his compositions he put on record. In October he began making records as Bix and His Gang, including "At the Jazz Band Ball" and "Royal Garden Blues."

Goldkette dissolved his top band in September 1927, and after a brief spell with bass saxophonist Adrian Rollini's group at the Club New Yorker, Bix and Trumbauer joined Paul Whiteman's orchestra in Indianapolis on October 27, 1927. Whiteman led the best-paid and most popular dance band in the country, and Bix was featured on records such as "From Monday On," "Sugar" and "Changes," for which the arranger Bill Challis wrote scores built around his solos, and on hits including "Ol' Man River" with Bing Crosby. On October 7, 1928, he played "In a Mist" at a Whiteman concert at Carnegie Hall. His drinking had meanwhile worsened. On November 30, 1928, he suffered a breakdown on tour in Cleveland, and in 1929 he went home to Davenport, spent that summer with the band in Hollywood during preparations for the film The King of Jazz, and from October 14 to November 18 was treated at the Keeley Institute in Dwight, Illinois. Whiteman held his chair open, but Bix did not rejoin the orchestra after returning to New York in January 1930. He worked sparingly. In May 1930 he joined a Carmichael session that produced "Rockin' Chair" and "Barnacle Bill the Sailor," with a lineup that, per Discogs credits, also included Benny Goodman, Tommy Dorsey and Gene Krupa. He recorded as Bix Beiderbecke and His Orchestra for Victor on September 8, 1930, and a week later, on September 15, played on the first recording of Carmichael's "Georgia on My Mind," his last recording session. A regular spot in Nat Shilkret's orchestra on NBC's Camel Pleasure Hour was his only steady income.

He returned to New York for the last time in February 1931 and passed away on August 6, 1931, at 28, in his apartment in Sunnyside, Queens. The death certificate gave lobar pneumonia, with alcoholism and brain edema often cited as contributing causes. He was buried on August 11 in the family plot at Oakdale Cemetery in Davenport. Three of his piano pieces, "Candlelights," "Flashes" and "In the Dark," were transcribed with Challis's help and published but never recorded by him. His reputation grew after his death through memoirs by Carmichael, Mezz Mezzrow and Eddie Condon, Dorothy Baker's 1938 novel Young Man with a Horn (which Baker said drew on his music rather than his life) and the 1950 film of that name, and Richard Sudhalter and Philip Evans's 1974 biography Bix: Man and Legend. Davenport has held the Bix Beiderbecke Memorial Jazz Festival since 1971, and a museum and archive devoted to him opened there in 2017. "Singin' the Blues" and "In a Mist" are in the Grammy Hall of Fame, as is the 1930 "Georgia on My Mind," and he was elected to the Down Beat Jazz Hall of Fame in 1962.

Bix played cornet and never changed to trumpet. His tone was clear and round, his melodic approach centered on the middle register, and his technique was largely self-taught, in contrast to the bravura and upper-register command of Louis Armstrong, whom he admired; the critic Terry Teachout has called the two the most influential figures in early jazz. His solos on "Singin' the Blues" and "I'm Coming, Virginia" shaped what critics call the jazz ballad style: restrained, tightly constructed choruses in which each phrase answers the last. His chord choices came partly from the Impressionist harmonies of Debussy and Ravel and from the American composer Eastwood Lane, and they color his one recorded piano piece, "In a Mist." He learned from the Original Dixieland Jazz Band, the New Orleans Rhythm Kings and Armstrong, and Paul Mares of the Rhythm Kings held that the New Orleans cornetist Emmett Hardy was his chief influence. His own influence reached Carmichael, who reworked a Bix cornet phrase into the central theme of "Stardust," and Bing Crosby, who cited him as a model. Rex Stewart of Fletcher Henderson's band reproduced the "Singin' the Blues" solo almost note for note on a 1931 Henderson record, and the saxophonist Lester Young later named Trumbauer's solo on the same record as a formative model. Some writers hear in the laid-back feeling of "Singin' the Blues" a hint of the cool jazz of the 1950s that Chet Baker and Bill Evans came to personify. In his own time his playing drew attention from European critics, notably in Britain's Melody Maker, before it did in the United States, and the image of a doomed Romantic genius that took hold after his death has long shaped how he is remembered.