Thomas was the eldest son of Edmund Crouchback, 1st Earl of Lancaster and Blanche of Artois. His paternal grandparents were Henry III of England and Eleanor of Provence. His maternal grandparents were Robert I of Artois and Matilda of Brabant, who was a daughter of Henry II, Duke of Brabant.
By his marriage to Alice de Lacy, Countess of Lincoln, daughter of Henry de Lacy, 3rd Earl of Lincoln, he became Earl of Lincoln, Earl of Salisbury and the 11th Baron of Halton upon the death of his father-in-law in 1311. Master of five earldoms, he was one of the wealthiest and most powerful men in England.
Thomas was in possession of many key fortesses, particularly in northern England. He was responsible for the extension of Pontefract Castle and in 1313 he began the construction of Dunstanburgh Castle a massive fortress in Northumberland.
His marriage to Alice de Lacy was not successful. They had no children, though he had two illegitimate sons. In 1317 she was abducted from her manor at Canford, Dorset by Richard de St Martin, a knight in the service of John de Warenne, 8th Earl of Surrey. This incident caused a feud between Lancaster and Surrey; Lancaster divorced his wife and seized two of Surrey's castles in retaliation. King Edward then intervened, and the two Earls came to an uneasy truce.
Although divorced from his wife, he continued to hold the powerful Earldoms of Lincoln and Salisbury. This was due to the marriage contract the two families had agreed, in effect upon the death of his father-in-law, Earl Thomas held these earldoms in his own right, not in right of his wife.
He served in the coronation of his cousin, King Edward II of England, on February 25, 1308, carrying Curtana, the sword of St Edward the Confessor. At the beginning of the King's reign, Lancaster openly supported Edward, but as the conflict between the king and the nobles wore on, Lancaster's allegiances changed. He despised the royal favourite, Piers Gaveston, who mocked him as "the Fiddler", and swore revenge when Gaveston demanded that the King dismiss one of Lancaster's retainers.
Lancaster was one of the Lords Ordainers who demanded the banishment of Gaveston and the establishment of a Baronial oligarchy. His private army helped separate the King and Gaveston, and Lancaster was one of the "judges" who convicted Gaveston and saw him executed.
After the disaster at Bannockburn in 1314, Edward submitted to Lancaster, who in effect became ruler of England. He attempted to govern for the next four years, but was unable to keep order or prevent the Scots from raiding and retaking territory in the North. In 1318 a new faction of barons arose, and Lancaster was deposed from office.
The new leadership, eventually headed by Hugh le Despenser, 1st Earl of Winchester and his son Hugh the younger Despenser, proved no more popular with the Baronage, and in 1321 Lancaster was again at the head of a rebellion. This time, however, he was defeated at the Battle of Boroughbridge, and taken prisoner.
Lancaster was tried by a tribunal consisting of, among others, the two Despensers, Edmund FitzAlan, 9th Earl of Arundel, and King Edward. Lancaster was not allowed to speak in his own defence, nor was he allowed to have anyone to speak for him. Because of their kinship and Lancaster's royal blood, the King commuted the sentence to mere beheading (as opposed to being drawn, quartered, and beheaded) and Lancaster was convicted of treason and executed near Pontefract Castle.
In 1326 or 1327 Parliament posthumously reversed Thomas's conviction, and Henry Plantagenet was further permitted to take possession of the Earldoms of Lancaster, Derby, Salisbury and Lincoln.
Thomas became venerated as a martyr and saint within a few months of his death. Hagiographies were written about him, and Edward III wrote three times to the Pope requesting his canonisation. He was never canonised, though rumours to that effect arose in the 1390s, when his cult experienced something of a revival.
Upon his death his titles and estates were forfeited, but in 1323 his younger brother Henry successfully petitioned to take possession of the Earldom of Leicester.