Clayton was born in Georgia (though he claimed he had been born in Africa) and moved to St. Louis as a child with his family. He had four children and worked in a factory in St. Louis, where he started his career as a singer (he could also play the piano and the ukulele but never did so on record). Clayton recorded six sides for Bluebird Records in 1935, but only two were issued. Clayton's entire family died in a house fire in 1937; following this he became an alcoholic and began wearing outsized hats and glasses. In order to pursue his music career, Clayton moved to Chicago with Robert Lockwood, and he received attention from Decca Records, thanks to a helpful recommendation from another musician, Charley Jordan. Ultimately Clayton returned to Bluebird, recording with Lockwood, the bassist Robert (Ransom) Knowling, the pianist Blind John Davis, and Lester Melrose, in 1941-42. He also recorded for Okeh Records at this time.
Among the songs he wrote were "Cheating and Lying Blues", frequently covered by other blues artists; "Pearl Harbor Blues", written after the Pearl Harbor bombing of 1941; and "Moonshine Woman Blues", which became a chart hit for B. B. King under the name "The Woman I Love" in 1968. He recorded again in 1946, recording the tunes "Hold That Train, Conductor" and "I Need My Baby", which were also both covered by King. Most of his later recordings featured Blind John Davis on piano. He was a regional sales success and played regularly in Chicago nightclubs with Lockwood and Sunnyland Slim. Attesting to his companion's popularity, Slim worked as "Dr. Clayton's Buddy" in his debut recording session, in 1947. In the same year, Willie Long Time Smith recorded "My Buddy Doctor Clayton".