Heinemann was born in 1863, in Surbiton, Surrey, the eldest son of Louis Heinemann, a director of Parr's Bank & native of Hanover, Germany, and his Lancashire born wife Jane Lavino. Both his parents were Jewish by descent, although they had been Anglican for two generations. In his early life he wanted to be a musician, either as a performer or a composer, but, realising that he lacked the ability to be successful in that field, he took a job with the music publishing company of Nicolas Trübner. When Trübner died, Heinemann founded his own publishing house in Covent Garden in 1890. The company published many translations of the classics in Great Britain as well as publishing such authors as H. G. Wells, Robert Louis Stevenson and Rudyard Kipling.
In 1899 he married the writer Magda Stuart Sindici, who used the pseudonym Kassandra Vivaria. The painter James Abbott McNeill Whistler attended their wedding near Rome, and painted the bride's portrait in 1900, but the couple divorced in 1904.
William Heinemann died unexpectedly in London on 5 October 1920. He had no children and his presumptive heir, his nephew John Heinemann, had died in the First World War. Heinemann's share of the company was bought out by Frank Nelson Doubleday, the New York publisher.