He was born in London and educated at New College, Oxford. He first became interested in politics as a result of the General Strike of 1926, and lectured in economics for the Workers' Educational Association to miners in Nottinghamshire.
He became Labour MP for Leeds in 1945, quickly rose through the ministerial ranks, and was Chancellor of the Exchequer in the government of 1950. It was at this time that he fell out with Aneurin Bevan over the introduction of charges in the National Health Service to pay for the Korean War. He later defeated Bevan in the party leadership contest, following the resignation of Clement Attlee in 1955.
Gaitskell's election as leader coincided with one of the Labour Party's leanest periods, and he is regarded by some as "the best Prime Minister we never had".
In 1959 the Labour Party had been widely expected to win the election but were undermined by public doubts about the credibility of proposals to raise pensions and by a highly effective populist campaign run by Harold Macmillan under the slogan "Life is better with the Conservatives, don't let Labour ruin it".
Gaitskell was an early moderniser, trying (unsuccessfully) to amend Labour's Clause IV which committed the party, on paper, to massive nationalisation of industry. He also, successfully, resisted attempts to commit Labour to a unilateralist position on nuclear weapons - losing the vote one year and then declaring he would "fight, fight and fight again to save the party I love".
Battles inside the party produced the Campaign for Democratic Socialism to defend the Gaitskellite position in the early 1960s. Many of the younger CDS members were founder members of the SDP in 1981. Though Gaitskell alienated many of his supporters by his opposition to British membership of the European Economic Community which in 1962 he declared to be the "end of a thousand years of island history".
He died after a sudden, short illness in 1963, and left an opening for Harold Wilson. The abrupt and unexpected nature of his death led to speculation that foul play was involved, the most popular conspiracy theory involving a KGB plot to ensure that Wilson (supposedly a KGB agent himself) became prime minister. This claim was given new life by Peter Wright's controversial 1987 book Spycatcher, but no credible evidence has ever come to light.