Born in Lambeth, London, Cotton was a choirboy and then started his musical career as a drummer, an occupation he also pursued in the army during the First World War. In the interwar years he had several jobs such as bus driver before setting up his own orchestra, the London Savannah Band, in 1924. At first a straight dance band, over the years the London Savannah Band more and more tended towards Music Hall/vaudeville entertainment, introducing all sorts of visual and verbal humour in between songs. Famous musicians that played in Billy Cotton's band during the 1920s and 30s included Arthur Rosebery, Syd Lipton and Nat Gonella. The band was also noted for their African American trombonist and tap dancer, Ellis Jackson. Their signature tune was "Somebody Stole My Gal", and they made numerous records – 78s, that is – for Decca.
During the Second World War Cotton and his band toured France with the Entertainments National Service Association (ENSA). After the war, he started his successful Sunday lunchtime radio show on BBC, the Billy Cotton Band Show, which ran for more than 20 years from 1949. It regularly opened with the band's signature tune and Cotton's call of "Wakey Wakey". From 1957, it was also broadcast on BBC television.
His son, Bill Cotton, later became BBC's head of variety.