The son of Sir Michael Balfour of Montquhanny, he was educated for the legal branch of the Church of Scotland. In June 1547, together with John Knox and others captured at St Andrews, Fife, following the capture of the castle by pro-Catholic French forces he was condemned to become a galley-slave rowing French galleys, but was released in 1549. He denounced Protestantism and entered the service of Mary of Guise, and was rewarded with important legal appointments.
He subsequently joined the Lords of the Congregation, a group of Protestant nobles who were against the marriage of the young, Catholic Mary Queen of Scots to the Dauphin of France (later to become Francois II of France), but betrayed their plans.
After Mary's arrival in Scotland he became one of her secretaries, in 1565 being reported as her greatest favourite after Rizzio. He obtained the parsonage of Flisk in Fife in 1561, was nominated an Extraordinary Lord of Session, and in 1563 one of the commissaries of the court which now took the place of the former ecclesiastical tribunal; in 1565 he was made a privy councillor, and in 1566 Lord Clerk Register, and was knighted.
According to Mary his murder was intended together with Rizzio's in 1566. An adherent of Bothwell, he was deeply implicated in Henry Stuart, Lord Darnley's murder, though not present at the commission of the crime. By his means Darnley was lodged at Kirk o' Field, his brothers' house. He was supposed to have drawn up the bond at Craigmillar for the murder; he signed it, was made under Bothwell deputy-governor of Edinburgh Castle, and is said to have drawn up the marriage-contract between Bothwell and Mary. When, however, the fall of Bothwell was seen to be impending he rapidly changed sides and surrendered the castle to Murray, stipulating for his pardon for Darnley's murder, the retention of the priory of Pittenweem, and pecuniary rewards. He was appointed Lord President of the Court of Session on resigning the office of Lord Clerk Register. He was present at the battle of Langside, and was accused of having advised Mary to leave Dunbar to her ruin, and of having betrayed to her enemies the casket letters. The same year, however, in consequence of renewed intrigues with Mary's faction, he was dismissed, and next year was imprisoned on the charge of complicity in Darnley's murder.
He succeeded in effecting his escape by means of bribery, the expenses of which he is said to have paid by intercepting the money sent from France to Mary's aid. In August 1571, during the regency of Matthew Stewart, 4th Earl of Lennox, an act of forfeiture was passed against him, but next year he was again playing traitor and discovering the secrets of his party to Morton, and he obtained a pardon from the latter in 1573 and negotiated the pacification of Perth the same year. Distrusted by all parties, he fled to France, where he seems to have remained till 1580. In 1579 his forfeiture was renewed by act of parliament. In January 1580 he wrote to Mary offering her his services, and in June made a similar offer to Queen Elizabeth I of England, in which he criticised the influence of the Jesuits, and proposed to make a journey to Dieppe to attend Protestant services.
On 27 December of the same year he returned to Scotland and effected the downfall and execution of Morton by producing a bond, probably that in defence of Bothwell and to promote his marriage with Mary, and giving evidence of the latter's knowledge of Bothwell's intention to murder Darnley. In July 1581 his cause was reheard; he was acquitted of murder by assize, and shortly afterwards in 1581 or 1582 he was restored to his estates and received at court. His career, one of the blackest in the annals of political perfidy and crime, closed shortly before the January 24 1584. He was the greatest lawyer of his day, and part-author at least of Balfour's Practicks, the earliest text-book of Scottish law, not published, however, till 1754. He married Margaret, daughter and heir of Michael Balfour of Burleigh, by whom, besides three daughters, he had six sons, the eldest of whom was created Lord Balfour of Burleigh in 1607.