Born in Stoke Heath, Coventry, Waterman had left Whitley Abbey Comprehensive School (now rebuilt and called Whitley Abbey Community School) to work at a railway depot. After closure of the depot, Waterman chose to follow a career in music, being inspired by The Beatles. To supplement his income as a DJ, Waterman became a gravedigger and then an apprentice at General Electric Company, becoming a trade union official.
Building a record collection through rare US imports, his DJ work began to take him across the UK, entertaining bigger crowds with a blend of rhythm and blues and soul music tunes he had sourced. Given a residency with the Mecca group, he developed new initiatives including matinée discos for under 18s at Coventry’s Locarno club, which gave him a valuable insight into what music interested a younger audience. Waterman noticed that the younger dancers preferred records with high beats per minutes and this influenced his later work. It was at the Locarno that Waterman first met Neville Staple, later to be a vocalist for The Specials - a band that Waterman would manage for a brief period. In early 2009, Waterman wrote the foreword to Neville's biography "Original Rude Boy", which was published by Aurum Press in May 2009.
Waterman took up a job as an A&R man, and worked in the Philadelphia scene, which included introducing The Three Degrees to the UK. He then moved to Jamaica working with Peter Tosh and Lee Perry, and producing Susan Cadogan’s reggae-crossover hit Hurts So Good.
In 1979, Waterman set up Loose Ends with Peter Collins, the first coming under the name 14-18 with a single inspired by World War I, "Good-Bye-Ee," and hits with artists like Musical Youth and Nik Kershaw. He then set up his own company PWL (Pete Waterman Limited) in 1984, quickly signing producers Matt Aitken and Mike Stock, who produced the song "Whatever I Do" for Hazel Dean. Stock Aitken Waterman became one of the most successful musical production teams of the 1980s.
To date, Waterman has scored a total of twenty two UK number one singles with his various acts and he claims upwards of 500 million sales worldwide (inclusive of singles, albums, compilation inclusions, downloads, etc). Waterman has also appeared in the Steps video "Tragedy".
In the late-1990s, production company Celador hired Waterman to compose a song for their new quiz show, Who Wants to Be a Millionaire?. The company felt the song unsuitable, and instead approached Keith Strachan.
Waterman has appeared as a judge on both series of Pop Idol in the UK (2001/2 and 2003), and also Popstars: The Rivals (2002). The latter saw him become manager of the winning boy band One True Voice, who then lost the race to Christmas number 1 to the same show's winning girl group, Louis Walsh's Girls Aloud.
Waterman returned as judge for the second series of Pop Idol, but was constantly critical of the eventual winner, Michelle McManus, and was unashamedly unhappy when her victory was announced. Waterman has since said he will not appear on any similar programmes in future, and has on several occasions attacked more recent talent shows (specifically those devised by his former Pop Idol colleague, Simon Cowell)
Whilst he has kept his promise not to appear as a talent show judge, on 12 October 2008, Waterman joined his fellow ex-Pop Idol judges Neil Fox and Nicki Chapman on Peter Kay's spoof talent show Britain's Got The Pop Factor... And Possibly A New Celebrity Jesus Christ Soapstar Superstar Strictly On Ice, a fully-scripted fictional spoof on the talent show genre. The show parodied the emotional manipulation behind Cowell's shows, with Waterman memorably interrupting a funeral to tell an ousted contestant that the loss of his gran (who had died of shock when learning her grandson had been dropped from the show) would provide the sob story he needed to get him on to the show.
In factual television, Waterman's interest in trains saw him present a historic self-retrospective view in Waterman on Railways for Channel Four/the Discovery Channel. Waterman also appeared in an advert by the National Blood Service in the UK, their sixth TV advert which also features Carol Smillie and Will Carling.
Waterman was one of the contestants in the 2009 series of the BBC programme Celebrity MasterChef, but was knocked out in the first round.
Waterman wrote and produced the UK entry for the 2010 Eurovision Song Contest. This song was performed by the final three acts on Eurovision: Your Country Needs You! on 12 March 2010, with the winner Josh Dubovie subsequently coming last in the Eurovision Grand Final on 29 May 2010, in Oslo, Norway.
Pete Waterman's main interests outside music is in railways.
He has been involved in several railway ventures over the years. In 1988 he revived the name of the London and North Western Railway Company for his rail vehicle maintenance business, based at Crewe, which was the largest privately owned rail maintenance business in the country until it was sold to Arriva in November 2008. In 1994 in the opening stages of the privatisation of British Rail, he bought the Special Trains Unit which ran tourist charters and the like. This was sold on after a few years. Waterman also owns a steam locomotive and carriage restoration company called LNWR Heritage, based at Crewe Heritage Centre. He also founded The Waterman Railway Heritage Trust, which currently owns several steam and diesel locomotives including 5224, 5553, 7027 'Thornbury Castle'; 46035 'Ixion' and 47402 'Gateshead'.
He also has a keen interest in model railways, and is the founder of the model railway business Just Like the Real Thing, which specialises in O scale kits. He works closely with model-maker Malcolm Mitchell on this project. He continues to retain an interest in the company and regularly accompanies its sales stand to model railway exhibitions. Waterman has an extensive private collection of railway models and railway layouts, in O scale and larger gauges. He is currently building a large model of Leamington Spa railway station, in O scale, set in the 1950s. He has written several books and many magazine articles on the subject. He has said that his ability to become absorbed in making models helped him cope with grief after the death of his son.
In the New Year's Honours List published 31 December 2004 he was given an OBE for his services to music. In December 2006, he became a patron of the newly formed charity, the City, Lambeth and Southwark Music Education Trust.
Waterman has been married three times: