Thompson was born in Sheffield, Alabama, on August 19, 1942, the son of Ruth Inez (nee Bradley) and Fletcher Session Thompson (born Lauderdale County, Alabama, August 26, 1919, died Lawrenceburg, Tennessee, May 27, 1990), who was an automobile salesman. Thompson had English and distant Dutch ancestry. He attended public school in Lawrenceburg, graduating from Lawrence County High School, where he played high-school football. Thereafter, he worked days in the local post office, and nights at the Murray bicycle assembly plant.

In 1973, Thompson was appointed minority counsel to assist the Republican senators on the Senate Watergate Committee, a special committee convened by the U.S. Senate to investigate the Watergate scandal. Thompson was sometimes credited for supplying Republican Senator Howard Baker's famous question, "What did the President know, and when did he know it?" This question is said to have helped frame the hearings in a way that eventually led to the downfall of President Richard Nixon.  A Republican staff member, Donald Sanders, found out about the White House tapes and informed the committee on July 13, 1973. Thompson was informed of the existence of the tapes, and he, in turn, informed Nixon's attorney, J. Fred Buzhardt. "Even though I had no authority to act for the committee, I decided to call Fred Buzhardt at home," Thompson later wrote, "I wanted to be sure that the White House was fully aware of what was to be disclosed so that it could take appropriate action."  Three days after Sanders's discovery, at a public, televised committee hearing, Thompson asked former White House aide Alexander Butterfield the famous question, "Mr. Butterfield, were you aware of the existence of any listening devices in the Oval Office of the President?" thereby publicly revealing the existence of tape recordings of conversations within the White House. National Public Radio later called that session and the discovery of the Watergate tapes "a turning point in the investigation."  Thompson's appointment as minority counsel to the Senate Watergate committee reportedly upset Nixon, who believed Thompson was not skilled enough to interrogate unfriendly witnesses and would be outfoxed by the committee Democrats. According to historian Stanley Kutler, however, Thompson and Baker "carried water for the White House, but I have to give them credit--they were watching out for their interests, too... They weren't going to mindlessly go down the tubes [for Nixon]." When the Watergate investigation began to pick up speed, tapes revealed that Nixon remarked to his then-Chief of Staff Alexander Haig, "Oh shit, he's dumb as hell."  Journalist Scott Armstrong, a Democratic investigator for the Senate Watergate Committee, is critical of Thompson for having disclosed the committee's knowledge of the tapes to Buzhardt during an ongoing investigation, and says Thompson was "a mole for the White House" and that Thompson's actions gave the White House a chance to destroy the tapes. Thompson's 1975 book At That Point in Time, in turn, accused Armstrong of having been too close to The Washington Post's Bob Woodward and of leaking committee information to him. In response to renewed interest in this matter, in 2007 during his presidential campaign, Thompson said, "I'm glad all of this has finally caused someone to read my Watergate book, even though it's taken them over 30 years."

What was his role in the watergate hearings?
In 1973, Thompson was appointed minority counsel to assist the Republican senators on the Senate Watergate Committee,