Baier was born in Rumson, New Jersey. Raised Catholic, he attended Marist High School, a private Roman Catholic high school in Atlanta, GA, graduating in 1988. Baier then attended DePauw University in Greencastle, Indiana, graduating in 1992 with a BA degree in political science and English. At DePauw, he became a member of the Xi Chapter of the Sigma Chi Fraternity.
Baier began his television career with a local station in Rockford, Illinois, before joining WRAL-TV, then CBS now NBC affiliate (As of February 29, 2016) affiliate in Raleigh, North Carolina. He sent an audition tape to Fox News in 1998, and was hired as the network's Atlanta bureau chief. On September 11, 2001, he drove from Georgia to Arlington, Virginia, to cover the attack on the Pentagon. He never returned to the Atlanta bureau and was instead tapped as the network's Pentagon correspondent, remaining at the post for five years and taking 11 trips to Afghanistan and 13 trips to Iraq.
He was named Fox News's White House correspondent in 2007, covering the administration of George W. Bush. In the fall of 2007, he began substituting for Brit Hume, then the anchor of Special Report, on Fridays.
On December 23, 2008, Brit Hume anchored his final show and announced Baier would replace him as anchor of Special Report. He hosted his first show as permanent anchor on January 5, 2009.
A Freedom of Information Act request filed to investigate alleged anti-Fox News bias in the Barack Obama administration revealed an internal email from the White House communications office, dated October 23, 2009, that referred to Baier as a "lunatic." The aide who sent the email later apologized to Baier.
On November 2, 2016, six days before the election, Baier led off his news show with a report that multiple FBI sources told him that it was 99% likely that Hillary Clinton's email server had been hacked by “five foreign intelligence agencies.” The next day, Baier reported there would "likely be an indictment" in the investigation of Hillary Clinton's role in the Clinton Foundation and State Department. One day later, on November 4, Baier retracted and apologized for both stories, now saying there was no evidence at this time for either allegation. No explanation was given as to how his originally-claimed multiple informants had all given him the same unverified story.
Baier, who served as an altar boy in his youth, is a practicing Roman Catholic and attends Holy Trinity Catholic Church in Georgetown.
Baier and his wife Amy have two sons. One of their sons was born with cardiac problems and before the child's open-heart surgery in 2008, President George W. Bush invited Baier and his wife and son to the Oval Office for a visit and had the White House physician update him on Paul's progress. In 2009, Baier was named a "Significant Sig" by the Sigma Chi Fraternity.