Huston was born in Toronto, Ontario Attended school at Winchester Street Public School  the son of Elizabeth (née McGibbon) and Robert Moore Houghston, a provincial farmer who founded a construction company. He was of Scottish and Irish descent. He had a brother and two sisters, one of whom was the famous theatrical voice coach Margaret Carrington(1877-1941).
His family moved from Orangeville, Ontario before his birth where they were farmers. As a young man he worked in construction and in his spare time attended the Shaw School of Acting. He made his stage debut in 1902. He went on to tour in In Convict Stripes, a play by Hal Reid, father of Wallace Reid and also appeared with Richard Mansfield in Julius Caesar. He again toured in another play The Sign of the Cross. In 1904, he married Rhea Gore and gave up acting to work as a manager of electric power stations in Nevada and Missouri. He maintained these jobs till 1909 during which time the couple had a son, John in 1906
In 1909, his marriage floundering, he began appearing in vaudeville with an older actress called Bayonne Whipple (1865 - 1937) (born Mina Rose). They were billed as Whipple and Huston and in 1915 they married. Vaudeville was their livelihood into the 1920s.
Huston began his Broadway career on January 22, 1924 in which he appeared in a play Mr. Pitt. Several following Broadway plays solidified his fame i.e. Desire Under the Elms, Kongo, The Barker, Elmer the Great, Dodsworth.
Once talkies began in Hollywood, he achieved fame in both character roles and as a leading man. His first major role was portraying the villainous Trampas in the western The Virginian (1929) withGary Cooper.
He starred as the title character in the Broadway theatrical adaptation of Sinclair Lewis's novel Dodsworth in 1934 and the play's film version two years later. For his role as Sam Dodsworth, Huston won the New York Critic's Circle Award for Best Actor and was nominated for the Academy Award.
Huston remained busy throughout the 1930s and 1940s, both on stage and screen (becoming one of America's most distinguished actors); he performed "September Song" in the original Broadway production of Knickerbocker Holiday in 1938. Among his films are Abraham Lincoln (1930), Rain (1932), Gabriel Over the White House (1933), The Devil and Daniel Webster (1941),Yankee Doodle Dandy (1942), and Mission to Moscow (1943), a pro-Soviet World War II propaganda film as Ambassador Joseph E. Davies.
In 1948, he played Howard in The Treasure of the Sierra Madre, which was directed by his son, John Huston. The film was based on B. Traven's novel, which told the story of three gold diggers in 1920s post-revolution Mexico. Walter Huston won the Golden Globe Award and the Academy Award for Best Supporting Actor for the film, while John Huston won the Best Director Academy Award, thus making them the first father and son to win at the same ceremony.
His son John Huston went from a screenwriter, to an Academy Award-winning director, to an acclaimed actor. All of his grandchildren have becomes actors, as well as his great-grandson.
Anjelica Huston sang his famous September song on the May 7, 2012 episode of the NBC TV series Smash.
In 1998, John Weld wrote and published the biographical book "September Song - an intimate biography of Walter Huston".