Henderson was born in Glasgow, and from about 1873, brought up in Newcastle, where he grew up in Mill Lane and attended school at Todd's Nook. He worked as an iron-moulder at the Robert Stephenson foundry and locomotive works on Forth Banks from 1881-93. He became unpaid secretary of the Ironfounders Union, Newcastle lodge, and rose steadily in the organisation, being particularly effective in setting up conciliation machinery. In this he was following up the teaching of his liberal mentor Robert Spence Watson (q.v.).
Henderson was a man of strong non-conformist faith and ideals of brotherhood. In Aims of Labour (1917), he wrote: 'Revolution... is alien to the British character.' He also affirmed the desirability of compromise. The strike weapon was to be a last resort.
Henderson was MP for Barnard Castle from 1903 until 1918, and moved from 30 Croydon Road in Newcastle to 45 Hurworth Terrace in Darlington (moving later to Windsor Terrace). In 1906 he moved to London and thereafter, though hitherto a radical Liberal, helped to build up the Labour Party, succeeding Ramsay MacDonald in the arduous task of secretary from 1911-34. He served in Lloyd George's War cabinet of five, but left in 1917 over the Stockholm Conference affair. Declining to support Asquith against Lloyd George, he resolved to make Labour the second party in the state. As A.J.P. Taylor states, between July 1917 and the end of the war, Henderson created the modern Labour Party. Though Labour continued to support the war, Henderson formulated the party's own foreign policy. He also enlisted Sidney Webb to transform the programme and organisation of the party, so as to make its appeal national, rather than sectional. At Wansbeck on 29 May 1918, a Labour candidate almost defeated the Coalition nominee. The writing was on the wall. The party was now independent both in programme and finance, which came from the political levy of the trade unions. Henderson's achievement led indirectly to the fall of the 'non-party' Lloyd George.
Henderson was Home Secretary (1924), and the statement of aims known as Labour and the Nation (1928), which he oversaw, did much to re-elect Labour in 1929. He became Foreign Secretary (1929-31) and though attacked as a 'bolshevist' by the Daily Mail, he in fact converted Labour to the League of Nations. Despite being a staunch internationalist, however, he knew no languages and very little of other countries' history and traditions. As foreign secretary, Henderson was firm and impartial. he believed in the League and made it work. His great dream was disarmament. and was president of the World Disarmament Conference 1932-35, receiving the Nobel Peace Prize in 1934.