He was a descendant of the lords of Kerry (dating from 1181), and his grandfather Thomas Fitzmaurice, who was created earl of Kerry (1723), married the daughter of Sir William Petty. On the death without issue of Sir Williarn Petty's sons, the first earls of Shelburne, the estates passed to his nephew John Fitzmaurice (advanced in 1753 to the earldom of Shelburne), who in 1751 took the additional name of Petty.
His son William spent his childhood in the remotest parts of the south of Ireland, and, according to his own account, when he entered Christ Church, Oxford, in 1755, he had "both everything to learn and everything to unlearn." From a tutor whom he describes as "narrow-minded" he received advantageous guidance in his studies, but he attributes his improvement in manners and in knowledge of the world chiefly to the fact that, as was his "fate through life," he fell in "with clever but unpopular connexions."
Shortly after leaving the university he served in Wolfe's regiment during the Seven Years' War, and so distinguished himself at Minden and Kloster-Kampen that he was raised to the rank of colonel and appointed aide-de-camp to the king (1760). Being thus brought into near communication with Lord Bute, he was in 1761 employed by that nobleman to negotiate for the support of Henry Fox, Lord Holland. He was returned to the House of Commons as member for Wycombe, but in 1761 he succeeded his father as earl of Shelburne in the Irish peerage, and Baron Wycombe in the peerage of Great Britain (created 1760).
Though he declined to take office under Bute he undertook negotiations to induce CJ Fox to gain the consent of the Commons to the peace of 1763. Fox affirmed that he had been duped, and, although Shelburne always asserted that he had acted in thorough good faith, Bute spoke of the affair as a "pious fraud." Shelburne joined the Grenville ministry in 1763 as president of the Board of Trade, but, failing in his efforts to replace Pitt in the cabinet, he in a few months resigned office. Having moreover on account of his support of Pitt on the question of Wilkes's expulsion from the House of Commons incurred the displeasure of the king, he retired for a time to his estate.
After Pitt's return to power in 1766 he became secretary of state, but during Pitt's illness his conciliatory policy towards America was completely thwarted by his colleagues and the king, and in 1768 he was dismissed from office. In 1782 he consented to take office under the marquess of Rockingham on condition that the king would recognize the United States. On the death of Lord Rockingham in the same year he became premier; but the secession of Fox and his supporters led to the famous coalition of Fox with North, which caused his resignation in the following February, his fall being perhaps hastened by his plans for the reform of the public service. He had also in contemplation a bill to promote free commercial intercourse between England and the United States. When Pitt acceded to office in 1784, Shelburne, instead of receiving a place in the cabinet, was created marquess of Lansdowne. Though giving a general support to the policy of Pitt, he from this time ceased to take an active part in public affairs.
During his lifetime he was blamed for insincerity and duplicity, and he incurred the deepest unpopularity, but the accusations came chiefly from those who were dissatisfied with his preference of principles to party, and if he had had a more unscrupulous regard to his personal ambition, his career as a statesman would have had more outward success. He was cynical in his estimates of character, but no statesman of his time possessed more enlightened political views, while his friendship with those of his contemporaries eminent in science and literature must be allowed considerable weight in qualifying our estimate of the moral defects with which he has been credited.
He was twice married, first to Lady Sophia (1745-1771), daughter of John Carteret, Earl Granville, through whom he obtained the Lansdowne estates near Bath, and secondly to Lady Louisa (1755-1789), daughter of John Fitzpatrick, 1st earl of Upper Ossory. John Henry Petty Fitzmaurice (1765-1809), his son by the first marriage, succeeded as 2nd marquess, after having sat in the House of Commons for twenty years as member for Chipping Wycombe.