Born Cora Walton in Shelby County, Tennessee, Taylor was the daughter of a sharecropper. She left Memphis for Chicago, Illinois, in 1952 with her husband, truck driver Robert "Pops" Taylor. In the late 1950s she began singing in Chicago blues clubs. She was spotted by Willie Dixon in 1962, and this led to wider performances and her first recording contract. In 1965, Taylor was signed by Chess Records where she recorded "Wang Dang Doodle," a song written by Dixon and recorded by Howlin' Wolf five years earlier. The song became a hit, reaching number four on the R&B charts in 1966, and selling a million copies. Taylor recorded several versions of "Wang Dang Doodle" over the years, including a live version at the 1967 American Folk Blues Festival with harmonica player Little Walter and guitarist Hound Dog Taylor. Taylor subsequently recorded more material, both original and covers, but never repeated that initial chart success.

National touring in the late 1960s and early 1970s improved her fan base, and she became accessible to a wider record buying public when she signed with Alligator Records in 1975. She recorded nine albums for Alligator, 8 of which were Grammy nominated, and came to dominate the female blues singer ranks, winning twenty five W.C. Handy Awards (more than any other artist). After her recovery from a near fatal car crash in 1989, the 1990s found Taylor in films such as Blues Brothers 2000 and Wild at Heart, and she opened a blues club on Division Street in Chicago in 1994, which relocated to Wabash Ave in Chicago's South Loop in 2000. (The club is now closed.)

Taylor influenced musicians such as Bonnie Raitt, Shemekia Copeland, Janis Joplin, Shannon Curfman, and Susan Tedeschi. In the years prior to her death, she performed over 70 concerts a year and resided just south of Chicago in Country Club Hills, Illinois.

In 2008, the Internal Revenue Service said that Taylor owed $400,000 in back taxes, penalties and interest. Her tax problems concerned 1998, 2000 and 2001; for those years combined, her adjusted gross income was $949,000.

Taylor died on June 3, 2009, after complications from surgery for gastrointestinal bleeding on May 19, 2009. Her final performance was at the Blues Music Awards, on May 7, 2009.