He was born in London, the youngest son of British Prime Minister Robert Walpole. He was educated at Eton College and King's College, Cambridge. His homosexual proclivities revealed themselves early, and he is believed to have had affairs with the poet Thomas Gray, and with Henry Fiennes Clinton, 9th Earl of Lincoln (later 2nd Duke of Newcastle). Gray accompanied Walpole on the Grand Tour, but they quarrelled, and Walpole returned to England in 1741 and entered parliament. He was never politically ambitious, but remained an MP even after the death of his father in 1745 left him a man of independent means.
Following his father's politics, he was a devotee of King George II and Queen Caroline, siding with them against their son, Frederick, Prince of Wales, about whom Walpole wrote spitefully in his memoirs. Walpole's home, Strawberry Hill, near Twickenham, was a fanciful concoction of neo-Gothic which began a new architectural trend. In 1764, he published his Gothic novel, The Castle of Otranto, setting a literary trend to go with the architecture. From 1762 on, he published his Anecdotes of Painting in England, based on George Vertue's manuscript notes. His memoirs of the Georgian social and political scene, though heavily biased, are a useful primary source for historians. He also coined the term Serendipity.
His father was created Earl of Orford in 1742. Horace's elder brother, Robert Walpole, 2nd Earl of Orford (c.1701-1751), passed the title on to his son Robert Walpole, 3rd Earl of Orford (1730-1791). When the younger Robert died unmarried, Horace Walpole became the 4th Earl of Orford. When Horace Walpole died in 1797 the title became extinct. It was recreated in 1806 for Horace's cousin Horatio Walpole, 1st Earl of Orford (1723-1809). The great-grandson of the first earl of this creation, Horatio William Walpole (1813-1894), became the 4th Earl of Orford of the 1806 creation. The 1806 creation became extinct on the death of Robert Horace Walpole, 5th Earl of Orford (1854-1931). Descendants of a younger brother of the 1st Earl of the 1806 creation have inherited older baronies, including one once held by Horace.