He was born at Liverpool, and studied architecture under Richard Lane in Manchester. His earliest commissions were for domestic buildings, but his success as a designer of public buildings was assured as early as 1859 by winning the open competition for the Manchester assize courts. This work not only showed his ability to plan a complicated building on a large scale, but also marked him out as a champion of the Gothic cause. Nine years later, in 1868, another competition secured for Waterhouse the design of Manchester Town Hall, where he was able to show a firmer and more original handling of the Gothic style. The same year he was involved in rebuilding part of Caius College, Cambridge; this was not his first university work, for he had already worked on Balliol College, Oxford in 1867.
At Caius, out of deference to the Renaissance treatment of the older parts of the college, ths Gothic element was intentionally mingled with classic detail, while Balliol and Pembroke College, Cambridge, which followed in 1871, may be looked upon as typical specimens of the style of his mid career--Gothic tradition (European rather than British) tempered by individual taste and by adaptation to modern needs. Girton College, Cambridge, a building of simpler type, dates originally from the same period (1870), but has been periodically enlarged by further buildings. Two important domestic works were undertaken in 1870 and 1871 respectively--Eaton Hall for the Duke, then marquis, of Westminster, and Heythrop Hall, Oxfordshire, the latter a restoration of a fairly strict classic type. Iwerne Minster for Lord Wolverton was begun in 1877.
In 1865 Waterhouse had removed his practice from Manchester to London, and he was one of the architects selected to compete for the Royal Courts of Justice. He received from the government, without competition, the commission to build the Natural History Museum, South Kensington, a design which marks an epoch in the modern use of terracotta. The new University Club--a Gothic design--was undertaken in 1866, to be followed nearly twenty years later by the National Liberal Club, a study in Renaissance composition. His work was not confined to London, however, and he designed the Reading School building in 1870 before being engaged on a series of works for Victoria University, of which he was made LL.D. in 1895, firstly on the new building for Owens College, Manchester. Yorkshire College, Leeds, was begun in 1878; and Liverpool University College in 1885. St Paul's School, Hammersmith, was begun in 1881, and in the same year the Central Technical College in Exhibition Road, London.
Waterhouse's other works in London included the Prudential Assurance Company's offices in Holborn; University College Hospital; the National Provincial Bank, Piccadilly, 1892; the Surveyors' Institution, Great George Street, 1896; and the Jenner Institute of Preventive Medicine, Chelsea, 1895. For the Prudential Company he designed many provincial branch offices, while for the National Provincial Bank he also designed premises at Manchester. The Liverpool Infirmary was Waterhouse's largest hospital; and St. Mary's Hospital, Manchester, the Alexandra Hospital, Rhyl, and extensive additions at the general hospital, Nottingham, also involved him. Among works not already mentioned are Salford Prison; St Margaret's School, Bushey; the Metropole Hotel, Brighton; Hove Town Hall; Alloa Town Hall]]; St Elizabeth's church, Reddish; the Weigh House chapel, Mayfair; and Hutton Hall, Yorkshire.
Waterhouse became a fellow of the Royal Institute of British Architects in 1861, and was President from 1888 to 1891. He obtained a grand prix for architecture at the Paris Exposition of 1867, and a "Rappel" in 1878. In the same year he received the Royal gold medal of the Royal Institute of British Architects, and was made an associate of the Royal Academy, of which body he became a full member in 1885 and treasurer in 1898. He was also a member of the academies of Vienna (1869), Brussels (1886), Antwerp (1887), Milan (1888) and Berlin (1889), and a corresponding member of the Institut de France (1893). After 1886 he was constantly called upon to act as assessor in architectural competitions, and was a member of the international jury appointed to adjudicate on the designs for the west front of Milan Cathedral in 1887. In 1890 he served as architectural member of the Royal Commission on the proposed enlargement of Westminster Abbey as a place of burial. From 1891 to 1902, when he retired, his work was conducted in partnership with his son, Paul Waterhouse.