Douglas was born in Tunbridge Wells, Kent, the son of Capt. Keith Sholto Douglas, MC (retired) and Marie Josephine Castellain. His mother became unwell and collapsed in 1924 of encephalitis lethargica, never to fully recover. By 1926, the chicken farm set up by his father collapsed. Douglas was sent to a preparatory school (Edgeborough School in Guildford) the same year. The family became increasingly poor, and his father had to leave home in early 1928 to seek better employment in Wales. The persistent ill-health of Marie led to the collapse of the marriage of his parents by the end of that year, and his father remarried in 1930. Douglas was deeply hurt by his father not communicating with him after 1928, and when Capt. Douglas did write at last in 1938, Keith did not agree to meet him. In one of his letters written in 1940 Douglas looked back on his childhood: "I lived alone during the most fluid and formative years of my life, and during that time I lived on my imagination, which was so powerful as to persuade me that the things I imagined would come true."
Marie Douglas faced extreme financial distress, so much so that only the generosity of the Edgeborough headmaster Mr. James permitted Douglas to attend school in 1930-1931, his last year there. Douglas sat in 1931 for the entrance examination to Christ's Hospital, where education was free and there was monetary assistance to cover all other costs. He was accepted, and joined Christ's Hospital, near Horsham, in September 1931, studying there till 1938. It was at this school that his considerable poetic talent and artistic ability were recognised. So was his cavalier attitude to authority and property, which nearly led to expulsion in 1935 over a purloined training rifle. In surprising contrast, he excelled as a member of the school's Officers Training Corps, particularly enjoying drill, although he was philosophically opposed to militarism.
After his bruising brush with authority in 1935, Douglas settled down to a less troubled and more productive period at school, during which he excelled both at studies and games, and at the end of which he won an Open Exhibition scholarship to Merton College, Oxford in 1938 to read History and English. The well-known poet Edmund Blunden was his tutor at Merton, and regarded his poetic talent highly. Blunden sent his poems to T. S. Eliot, the doyen of English poetry: Eliot found Douglas impressive. Douglas became the editor of The Cherwell, and one of the poets anthologised in the collection Eight Oxford Poets (1942), although by the time that volume appeared he was already in the army. He does not seem to have been acquainted with somewhat junior but contemporary Oxford poets like Sidney Keyes, Drummond Allison, John Heath-Stubbs, Philip Larkin etc. who would make names for themselves.
At Oxford Douglas entered a relationship with a sophisticated Chinese student named Yingcheng. Her own sentiments towards him were less intense, and she refused to marry him. Despite romantic involvements with other women later, most notably Milena, Yingcheng remained the unrequited love of his life and the source of his best romantic verse.
Within days of the declaration of war he reported to an army recruiting centre with the intention of joining a cavalry regiment, but like many others keen to serve he had to wait, and it was not until July 1940 that he started his training. On 1 February 1941 he passed out from Sandhurst, the officer training school, and was posted to the Second Derbyshire Yeomanry at Ripon. He was shipped to the Middle East in July 1941 and transferred to the Nottinghamshire (Sherwood Rangers) Yeomanry Regiment. Posted initially at Cairo and Palestine, he found himself stuck at Headquarters twenty miles behind El Alamein as a camouflage officer as the Second Battle of El Alamein began. At dawn on 24 October 1942, the Regiment advanced, and suffered numerous casualties after being roughly handled by enemy anti-tank guns. Chafing at inactivity, Douglas took off against orders on 27 October, drove to the Regimental HQ in a truck, and reported to the C.O.,Colonel E.O.Kellett, lying that he had been instructed to go to the front (luckily this escapade did not land him in serious trouble; in a reprise of 1935, Douglas got off with an apology). Desperately needing officer replacements, the Colonel posted him to A Squadron, and gave him the opportunity to take part as a fighting tanker in the Eighth Army's victorious sweep through North Africa vividly recounted in his beautiful memoir Alamein to Zem Zem, illustrated with his own drawings. The poems like 'Vergissmeinnicht' that came out of Douglas's personal experience of war in the Western Desert are among the very best of the war poetry genre.
Douglas returned from North Africa to England in December 1943 and took part in the D-Day invasion of Normandy on 6 June 1944. He was killed by enemy mortar fire on 9 June while the Regiment was advancing from Bayeux. He is buried at the war cemetery at Tilly-sur-Seuilles.