Milch was born in Wilhelmshaven. During World War I he served in the German army, originally as an artillery officer. He later transferred to the air corps and trained as an aerial observer. By the end of the war, he had risen to command of a squadron. He remained in the military until 1920 when he took his aviation experience to the private sector.
Milchs career before the rise of the Third Reich reflects the turbulent state of the emerging airline industry. With squadron mate Gotthard Sachsenberg, he formed a small airline in Danzig under the banner of Lloyd Luftdienst, Norddeutscher Lloyds union of regional German airlines. The airline, which linked Danzig to the Baltic States was simply called Lloyd Ostflug. In 1923, he became managing director of its successor company, Danziger Luftpost when Lloyd Luftdientst merged with its rival firm Aero Union to form Deutscher Aero Lloyd. From there, Milch and Sachsenberg went to work for rival Junkers Luftverkehr, where Sachsenberg had been appointed managing director. Sachsenberg only held the position until 1925, when Milch took over from him. It was in this position that Milch oversaw the merger of Junkers Luftverkehr to his previous firm of Deutscher Aero Lloyd in 1926, making him the first managing director of Deutsche Luft Hansa.
In 1933, Milch took up a position as State Secretary of the newly-formed Reichsluftfahrtministerium ("Reich Aviation Ministry" - RLM), answering directly to Hermann Göring. In this capacity, he was instrumental in establishing the Luftwaffe, originally responsible for armament production although Ernst Udet was soon making most of the decisions concerning contracts for military aircraft. He quickly used his position to settle personal scores with other aviation industry personalities, including Hugo Junkers and Willy Messerschmitt.
In 1935, Milch's ethnicity came into question when rumours began to circulate that his father, Anton Milch, was a Jew. This prompted an investigation by the Gestapo that Göring quelled by producing an affidavit signed by Milch's mother stating that Anton was not really the father of Erhard and his siblings, and naming their true father as Karl Brauer, her uncle. The investigation was dropped with Göring certifying Milch as Aryan.
At the outbreak of World War II Milch, now with the rank of General, commanded a Luftwaffe wing during the Norwegian campaign. Following the defeat of France, Milch was promoted to Field Marshall and given the title Air Inspector General. In 1944 he sided with Josef Göbbels and Heinrich Himmler in attempting to convince Hitler to remove Göring from command of the Luftwaffe following the failed invasion of the Soviet Union. When Hitler refused, Göring retaliated by forcing Milch out of his position. For the rest of the war, he worked under Albert Speer.
Following Hitlers suicide, Milch attempted to flee Germany, but was captured by Allied forces on the Baltic Coast on May 4 1945 and subsequently tried as a war criminal at Nuremberg. He was found guilty and sentenced to life imprisonment at Rebdorf prison, although he was released in June 1954. He lived out the remainder of his life at Düsseldorf, where he died in 1972.