Wilson was born in the parish of Glencorse, Midlothian to a farmer, John Wilson, and his mother Annie Clerk Harper. After his father died in 1873, his family moved to Manchester. He was educated at Owen's College, studying biology with the intent to become a physician. He then went to Sidney Sussex College, Cambridge where he became interested in physics and chemistry.

Wilson thereafter became particularly interested in meteorology, and in 1893 he began to study clouds and their properties. He worked for some time at the observatory on Ben Nevis, where he made observations of cloud formation. He then tried to reproduce this effect on a smaller scale in the laboratory in Cambridge, expanding humid air within a sealed container. He later experimented with the creation of cloud trails in his chamber caused by ions and radiation. For the invention of the cloud chamber he received the Nobel Prize in 1927.

Wilson married Jessie Fraser in 1908, the daughter of a minister from Glasgow, and the couple had four children. He died near Edinburgh, surrounded by his family.

The crater Wilson on the Moon is co-named for him, Alexander Wilson and Ralph Elmer Wilson.
The Wilson Condensation Cloud formations, occurring after a very large explosion (such as a nuclear detonation), are named after him.
The Wilson Society, the natural sciences society of Sidney Sussex College, is also named for him.
The archives of Charles Thomson Rees Wilson are maintained by the Archives of the University of Glasgow (GUAS).