Yang's grandparents emigrated from China to Northern Australia in the 1880s. He grew up on a tobacco farm in Dimbulah and attended high school in Cairns. He holds an architecture degree (1968) from the University of Queensland and an honorary doctorate of letters from the University of Queensland for his services to photography. Yang won International Photographer of the Year (1993) at the Higashikawa-Cho International Photographic Festival in Japan.
Yang moved to Sydney in 1969 and worked with the theatre group Performance Syndicate for many years before successfully turning to freelance photography. He held his first solo exhibition Sydneyphiles in 1977. In 1983 he began exploring his Chinese heritage, changed his surname to Yang and became a Taoist. On his website, Yang describes himself as 'a decorative Taoist' rather than an authority. His Chinese ethnicity and homosexuality are two of the major motifs in his work.
Beginning with 'The Face of Buddha' in 1989 at the Belvoir Street Theatre in Sydney, Yang has toured locally and internationally with a highly successful series of slide projection monologues. These include: 'China Diary'; 'Sadness'; 'The North'; 'Friends of Dorothy'; 'Blood Links'; 'Objects for Meditation' and 'China'.
He appears in Tony Ayres's documentary China Dolls, about the experiences of gay Asian men in Australia. Ayres later directed a film version of Yang's Sadness to great acclaim. During the first half of 1998 the New South Wales State Library hosted a major exhibition of his work entitled William Yang Diaries: A Retrospective Exhibition.
In 2004 Yang directed Merv Bishop in Flash Blak. In 2005-2006 he conducted workshops in storytelling and documentary making (including a return to Dimbula) and collaborated with Kate Champion and Kate Shearer on theatre productions. In 2010, Yang held a visiting fellowship at the University of New South Wales. The fellowship enabled him to digitise some of his performances into a small screen format.