Sherwood was born on March 14, 1965 in Las Vegas, Nevada. He was born into a musical family; his father Bobby Sherwood was an actor, musician, and big band leader and his mother Phyllis is a former singer and drummer. His brother Michael was a singer and keyboardist. Sherwood’s godfather was late comedian Milton Berle.

Sherwood’s music career started when he joined a band called Lodgic formed by Michael. Billy played bass and sang, while Michael played keyboards and sang back up. Lodgic also included Guy Allison on keyboards, Jimmy Haun on guitar and Gary Starns on drums. They eventually moved the band to Los Angeles in 1980. After many years of trying to get things together, they recorded their debut album Nomadic Sands, released in 1985.

After Lodgic broke up, Sherwood put together a new band with Guy Allison. They recruited guitarist Bruce Gowdy and drummer Mark T. Williams to form World Trade. They recorded their self-titled debut in 1989, with Sherwood taking on the roles of engineer, mixer, and producer again, along with his band duties as bassist and lead singer. Sherwood got back together with his bandmates from World Trade and released Euphoria in 1995, with Jay Schellen replacing Williams on drums.

By 1989, Sherwood was invited to meet Yes bassist Chris Squire after singer and record executive Derek Shulman suggested his name. By this time, Yes had suffered a setback when singer Jon Anderson had left and formed Anderson Bruford Wakeman Howe (ABWH). Sherwood was invited to jam with the remaining Yes members, Squire, guitarist Trevor Rabin, drummer Alan White, and keyboardist Tony Kaye, with the intention of Sherwood on lead vocals. By the time the five had recorded some demos, they merged with members of ABWH in 1990 to become an eight-man formation of Yes, which lasted until 1992. The two groups recorded songs for Union (1991), which features the first song that Sherwood and Squire wrote together, “The More We Live – Let Go”. Sherwood struck up a friendship with Squire that would lead him to work with him throughout the next 20 years.

In 1994, Sherwood toured with Yes as additional guitarist and keyboardist on their tour supporting Talk (1994) tour. Sherwood would co-produce, engineer and mix the new studio tracks for their following studio albums, Keys to Ascension (1996) and Keys to Ascension 2 (1997). Following Rick Wakeman’s departure in 1997 Sherwood and Squire continued to write songs, which Yes decided to record for their next studio album, Open Your Eyes (1997). This made Sherwood become a full-time member of the group, playing rhythm guitar and keyboards. The addition of Igor Khoroshev in 1997 left Sherwood to handle backing guitar and vocals for live shows. In 2000, after recording and touring their next album, The Ladder (1999), Sherwood left the group. A live album and DVD of the show at the House of Blues in Las Vegas, Sherwood’s hometown, was released as House of Yes: Live from House of Blues.

In 2003, Sherwood released The Unknown, another album with Chris Squire as Conspiracy.

In 2007, a new band with Sherwood, Alan White, Tony Kaye and Jimmy Haun was announced, called Circa. With the release of their debut album Circa 2007 and a live DVD concert, Circa has played various live dates. White left the band and was replaced by Jay Schellen.

In August 2008, Billy Sherwood’s released his third solo album, At the Speed of Life, for which he received an award that year as the best Progressive Rock Producer.

On January 14, 2009, Circa self-released on the Internet its second studio album, Circa HQ. This time, White was not available due to his commitments with Yes (who had begun a new tour). Sherwood’s long time friend, collaborator and drummer, Jay Schellen, replaced White on the album. After a short international tour, Sherwood and co. started another project with former Toto singer, Bobby Kimball. Kimball, Sherwood, Tony Kaye and Jimmy Haun formed new band, Yoso, with a debut studio album in April 2009. Haun later abandoned the line-up (in order to focus on his work for adverts). He was replaced by Yes tribute band guitarist, Johnny Bruhns. Schellen chose to focus on his work in Asia Featuring John Payne and, after a number of other drummers, the band toured with Scott Connor on drums. Yoso then disbanded.

In 2011, Circa returned with a new line-up of Sherwood, Kaye, Bruhns and Connor, while Sherwood released his fifth solo album, What was the Question?. In 2012, Sherwood wrote, produced, arranged and performed on The Prog Collective, an album featuring vocal or instrumental contributions from many of the progressive rock artists he had worked with over the years. He reprised the concept with a similar collection of artists for Epilogue, released in 2013.

On October 8, 2013, they released the official video to William Shatner’s record Ponder The Mystery, followed by a sold-out tour with Circa. Ponder The Mystery also features appearances of Steve Vai, Robby Krieger, Al Di Meola, George Duke, Vince Gill, Dave Koz, Rick Wakeman and Edgar Winter.

On May 19, 2015, it was officially announced that Squire would be undergoing treatment for acute erythroid leukemia, and that Yes would continue their 2015 North American tour with Sherwood filling Squire’s role. After Squire’s passing on June 27, 2015, Sherwood (along with other former and current members of Yes) made a public statement expressing his grief. In regards to his new role as the now-permanent bassist for Yes: “Chris said to me, ‘play the music, be yourself and make me proud’. It’s my true desire now [to] live up to his wishes.”

On July 8, 2016, Sherwood re-grouped with Circa to release their fourth album titled Valley Of The Windmill.

In 2017, Sherwood reunited with World Trade to record a third album titled Unify, which was released on August 4, 2017.

On 11 January 2017, it was announced that Sherwood would be filling in on bass and lead vocals for John Wetton for tour dates in the spring of 2017 while Wetton underwent chemotherapy, having been chosen by Wetton himself. Wetton died on 31 January 2017 and the tour went forward with Sherwood. In 2019, Asia’s line-up changed with Ron “Bumblefoot” Thal joining on guitar and lead vocals and Sherwood remaining on just bass and backing vocals.

In May 2019, Billy and his partner Elisa Furr, along with Jay Schellen, Guy Allison and John Thomas (who has worked with Vixen) formed a new band together featuring Furr on vocals.

On May 20, 2019, it was announced that Sherwood was working on his tenth solo album, titled Citizen: In The Next Life, which was released on July 12, 2019.

In July 2020, fellow Yes member Jon Davison announced a new side project featuring himself, Sherwood and Schellen called Arc of Life. He also said they had completed an album that would be released late 2020 or early 2021.