Albert Victor Grayson was born in Liverpool, the seventh son of William Grayson, a Yorkshire carpenter, and Elizabeth Craig, who was Scottish. He became an apprentice engineer in Bootle. He joined the Independent Labour Party and toured the country giving lectures, becoming a well-known orator despite having a stammer. In 1907 he stood as an Independent Labour candidate in the 1907 Colne Valley by-election, having been nominated by the local branch of the Independent Labour Party. He won a sensational, albeit narrow, victory. Grayson was paid an allowance by the ILP but refused to sign the Labour Party constitution.
Grayson rarely attended the House of Commons and began to develop a drinking problem. After losing his seat in the January 1910 general election, and failing even to retain his deposit when standing for Kennington, he continued his lecture tours but suffered a mental breakdown in 1913.
Writing of Grayson in an article on British radical politics in Pravda, V.I. Lenin noted that Grayson was "a very fiery socialist, but one not strong in principles and given to phrase-mongering."
Grayson alienated many of his left-wing colleagues by backing Britain's entry into World War I and turning his oratorical skills to recruiting soldiers. He served briefly in the New Zealand Army and was wounded. After the war, Grayson attempted to resurrect his political career.
In 1918 Sir Basil Thomson, head of the Special Branch, asked Maundy Gregory to spy on Victor Grayson. Grayson held left-wing views and was suspected of working as an agent for the new communist government in Russia. It was also feared he might be working for the Irish Republican Army.
Grayson discovered Maundy Gregory was spying on him and with the help of some important friends found out that the Prime Minister, David Lloyd George, was using Gregory to sell political honours. At a public meeting in Liverpool, Grayson accused Lloyd George of selling honours for between £10,000 and £40,000.
Grayson declared: "This sale of honours is a national scandal. It can be traced right down to 10 Downing Street, and to a monocled dandy with offices in Whitehall. I know this man, and one day I will name him."
Grayson's "monocled dandy" remark let Gregory know that he was in danger of being exposed. At the beginning of September 1920, Grayson was beaten up in the Strand. This was probably an attempt to frighten him, but he continued threatening to name the man behind the corrupt system.
On 28 September 1920, Grayson was out drinking with friends when he received a telephone message. He told his friends that he had to go to the Queen's Hotel in Leicester Square and would be back shortly. He did not return.
Donald McCormick claimed that artist George Flemwell had been painting a picture of the Thames when he saw Grayson entering a house (Number 6, The Island, Thames Ditton) on the river bank on 28 September 1920. Flemwell knew Grayson, having painted his portrait before the war, but did not realise the significance at the time because Grayson was not reported missing until several months later. An investigation carried out in the 1960s revealed that the house that Grayson entered was owned by Maundy Gregory. However, research by Andrew Cook has shown that McCormick in all likelihood fabricated the story.
Grayson was never seen again. It has been speculated that he was murdered to prevent his revealing evidence of corruption. However, a comprehensive biography by David G. Clark suggests his possible survival into the 1950s under a pseudonym. Clark also argued that Grayson was bisexual, a claim repeated elsewhere.
The trade union leader Vic Feather (1908–76), prominent in the early 1970s, was named after Grayson.
In 2014 Grayson's disappearance was the subject of an episode of BBC Radio 4's Punt PI.