Born in Bochum as the son of a mining plant director, he grew up in a family of anthroposophists. In 1962, he passed his second state exam after having studied law and politics in Munich, Hamburg, and Berlin; a year later, he opens his own law practice.
In the 1970s, he became a public figure as a trial lawyer, defending several terrorists of the left-wing Red Army Faction. In 1971, he represented his then-friend Horst Mahler (who would later become an advocate of the right-wing NPD); during the Stammheim trial (1975-1977), he was the only remaining attourney of Gudrun Ensslin. He would have to answer accusations of identifying with the terrorist's goals for the rest of his political career.
In 1980, he joined the newfounded Green Party and was elected into the Bundestag from 1983. Due to the party's then-policy of rotating its representatives, he had to leave parliament in 1986, but he was re-elected in 1987. Increasingly estranged from the fundamentalist wing of the Greens, he left the party in 1989, resigned from his seat in parliament, and joined the Social Democrats (SPD) instead – which he represented in the new Bundestag in 1990. In the following years, he was active on affairs of former East Germany and coordinating various legal policies of the SPD.
After Gerhard Schröder became Bundeskanzler in 1998, he appointed Schily Minister of the Interior. Since then, he has frequently been criticized for comparably conservative policy these days, for example in pushing through German anti-terrorist legislation after the September 11 terrorist attacks, which many see as contradictory to his earlier beliefs. On the other hand, political analysts have viewed him as an indispensable member of the cabinet, in order not to leave Schröder susceptible to conservative criticism on issues of crime and immigration.
In any case, with more than 70 years of age, he is the most senior member of the cabinet, and is increasingly respected as a living monument – at the height of his power, he is known for his stalwart self-confidence and brilliant rhetorics.
Schily is married for the second time and has two daughters from his first marriage, Jenny, born 1967 (an actress), and Anna, born 1981.