Daniel was born in Dayton, Texas, and he graduated from Baylor University. He worked as a lawyer in Liberty County, Texas. Daniel won a seat in the Texas House of Representatives in 1939 as a Democrat. Daniel opposed Texas adopting a sales tax and he was elected Speaker of the House in 1943. After a term as Speaker, Daniel enlisted in the United States Army as a Private. He was discharged in 1946 with the rank of captain.
He returned to Texas and won the seat of Attorney General. Daniel defended the University of Texas law school in the Sweatt v. Painter case. Daniel was also involved in the Tidelands controversy, and he endorsed Dwight D. Eisenhower in the 1952 presidential election. Daniel was elected to the United States Senate in 1952 and one of his first acts in the Senate was to draft a tidelands bill which was signed by President Eisenhower. Opposed to desegregation efforts, he also signed the so-called Southern Manifesto in 1956. Daniel also worked on a narcotics probe and reforming the electoral college.
Then U.S. Senator Daniel was elected governor of Texas in 1956. Thereafter, Daniel's chief intraparty rival Ralph Yarborough went on to succeed Daniel (after a temporary appointee, William A. Blakley of Dallas) in the Senate in a special election held in 1957. Also in the 1956 Democratic primary was a flamboyant former Republican, the historian J. Evetts Haley, who pledged to support segregation, remove price controls from natural gas, and halt the activities of South Texas political boss George Parr of Duval County. Haley returned to the Republican Party in 1964.
Daniel was reelected governor in 1958 and 1960. In 1960, Daniel won by a much larger margin for governor than John F. Kennedy and Lyndon B. Johnson had scored in Texas as the Democratic presidential and vice presidential nominees. Daniel received 1,637,755 votes (72.8 percent) to Republican William M. Steger's 612,963 ballots (27.2 percent). Yet Kennedy and Johnson barely won the Texas electoral votes over Richard M. Nixon.
In 1961, the legislature passed a 2-cent sales tax, which Daniel allowed to become law without his signature so the state would not go broke. After the passage of the sales tax, Daniel's popularity waned, and he failed at his attempt to be elected to a fourth term in 1962. He lost the Democratic nomination to former Navy Secretary John Connally, who then defeated the Republican Jack Cox of Houston.
He was appointed to head the Office of Emergency Preparedness by Lyndon B. Johnson. In 1971, Daniel was appointed by Governor Preston Smith to the Texas Supreme Court; he was re-elected twice in 1972 and 1979 before retiring during his second term. The Price Daniel, Sr. State Office Building is named in his honor.
Daniel's wife, Jean Houston Daniel, was a great-great-granddaughter of the legendary Sam Houston. Daniel's eldest son, Marion Price Daniel, Jr. (properly Marion Price Daniel, III), was, like his father, later Speaker of the Texas House but served only one term. Later he was killed by a gunshot wound in 1981. His second wife was accused of murder, but she was acquitted. Price and Jean Daniel's other children were Jean Houston Murph, Houston Lee, and John Baldwin.