Born into a Quaker family, Bunting was educated at the Royal Grammar School there for two years. He then studied at two Quaker schools: from 1912–1916 at Ackworth School in Yorkshire and from 1916–1918 at Leighton Park School in Berkshire. His Quaker education strongly influenced his pacifist opposition to World War I, and in 1918 he was arrested as a conscientious objector, serving a sentence of more than a year in Wormwood Scrubs and Winchester prisons. These events were to have an important role in his first major poem, Villon (1925). Villon was one of a rather rare set of complexly structured poems that Bunting labelled "sonatas," thus underlining the sonic qualities of his verse and recalling his love of music. After his release from prison in 1920, traumatized by the time spent in jail, Bunting went to London, where he enrolled in the London School of Economics, and had his first contacts with journalists, social activists and Bohemia. Tradition has it that it was Nina Hamnett who introduced him to the works of Ezra Pound by lending him a copy of Homage to Sextus Propertius. The glamour of the cosmopolitan modernist examples of Nina Hamnett and Mina Loy seems to have influenced Bunting in his later move from London to Paris.
After having travelled in Northern Europe while holding small secretarial jobs in London, Bunting left the London School of Economics without a degree and went to France. There, in 1923, he became friendly with Pound, who years later would dedicate his Guide to Kulchur (1938) to both Bunting and Louis Zukofsky, "strugglers in the desert". Bunting's poetry began to show the influence of this friendship. He visited Pound in Rapallo, Italy, and later settled there with his family from 1931 to 1933. He was published in the Objectivist issue of Poetry magazine, in the Objectivist Anthology, and in Pound's Active Anthology. He also worked as a music critic during this time.
During World War II, Bunting served in British Military Intelligence in Persia. After the war, he continued to serve on the British Embassy staff in Tehran until he was expelled by Muhammad Mussadegh in 1952.
Back in Newcastle, he worked as a journalist on the Evening Chronicle until his rediscovery during the 1960s by young poets, notably Tom Pickard, who were interested in working in the modernist tradition. In 1966, he published his major long poem, Briggflatts, named for the Quaker meeting house in Cumbria where he is now buried.