He was born William Alexander Clarke to an Irish Roman Catholic planter and a mother of Taíno origins. He claimed that he took the name Bustamante to honour an Iberian sea captain who befriended him in his youth.
After travelling the world, including working as a policeman in Cuba and as a dietician in a New York City hospital, he returned to Jamaica in 1932 and became a leader of the struggle against colonial rule. He first brought himself to public attention as a writer of letters to the Daily Gleaner newspaper; in 1937 he became treasurer of the Jamaica Workers' Union which had been founded by labour activist Allan G.S. Coombs. During the 1938 labour rebellion he quickly became identified as the spokesman for striking workers, and first manifested the charisma that was to lead to a distinguished political career. Coombs' JWU became the Bustamante Industrial Trade Union (BITU) after the revolt, and Bustamante became known as "The Chief".
He was imprisoned for subversive activities in 1940. However, the anti-colonial effort resulted in the granting of universal suffrage to Jamaica. He was released from prison in 1942 and founded the Jamaica Labour Party, in 1943. His cousin, Norman Manley, founded the JLP's chief rival, the People's National Party. Bustamante's party won 22 of 32 seats in the first House of Representatives elected by universal suffrage, making Bustamante the unofficial government leader (as Minister for Communications) until the position of Chief Minister was created in 1953. He held this position until the JLP was defeated in 1955. In 1947 and 1948 he also served as mayor of Kingston.
Though initially a supporter, he came to be an opponent of the Federation of the West Indies and agitated for Jamaica to become an independent state. It was Bustamante's decision that the JLP would not contest a by-election to the federal parliament that resulted in his rival and cousin, Premier Norman Manley, calling the referendum in 1961 that led to Jamaica's withdrawal and the break-up of the Federation.
Jamaica was granted independence in 1962 and Bustamante served as the independent country's first Prime Minister until 1967. However, in 1965 he withdrew from active participation in public life, and real power was held by his deputy, Donald Sangster.
In 1969, Bustamante was proclaimed a 'National Hero of Jamaica', along with Norman Manley, the black liberationist Marcus Garvey and two leaders of the 1865 Morant Bay rebellion, Paul Bogle and George William Gordon.
His death occurred on the fifteenth anniversary of Jamaica's independence.