Phillips was born in London, England, but when still a child his family moved to Leeds; he has lived in Yorkshire for most of his life. His father, Harry Phillips, was a sculptor, and his mother was a painter. At the age of 13, Phillips began learning to play guitar and started playing in different pubs in Leeds. In 1965, at the age of 17, he formed a band called Easy Mr. Steve's Bootleggers in which he mainly played piano. The group eventually recorded some demos but these were not released until 1996. They split up in 1967, although the various musicians continued to work together in different combinations from time to time. In 1968, after buying his first steel resonator guitar, a vintage National, he played many solo gigs in Leeds pubs. Then, Mark Knopfler, a junior reporter working for "The Yorkshire Evening Post," called Phillips to get an interview. They soon become friends and started playing together. Their stage name was The Duolian String Pickers. They went on playing in different pubs. Finally, in 1973, Knopfler left Leeds and moved to London to become part of Brewers Droop and, afterwards, founded Dire Straits, with whom he finally reached mainstream recognition. By the mid-1970s, Phillips had met the Bradford-born songwriter, singer and guitarist Brendan Croker. They opened a club in a Leeds pub called The Packhorse, where they also played guitar. As a side project, Phillips spent his spare time painting. Finally, in the 1980s, Phillips was persuaded to release his first album, titled ironically The Best of Steve Phillips. Recorded between 1977 and 1986, the album contained fourteen tracks, only one of which was self-composed: the rest were classic country blues and ragtime instrumentals by such artists as Blind Willie McTell, Big Bill Broonzy and Blind Blake. In 1989, he released a second album, Steel-Rail Blues, which contained more of his own compositions as well as arrangements of others' songs. Knopfler, already famous as the leader of Dire Straits, offered to produce Phillips's next album for him. However, following an impromptu gig in May 1986 at the famous Grove Inn in Leeds in which Knopfler joined Phillips and Croker, Phillips suggested that they form a band along with Croker. This idea became The Notting Hillbillies. Through this group, Phillips achieved a wider recognition that allowed him to go on releasing his full solo albums and to enhance his career. Phillips went on releasing albums throughout the 1990s. He has worked with a wide group of musicians whom he calls on for band gigs; they were at one time called The Famous Five but are now known as The Rough Diamonds. Most of these musicians have appeared on his albums, except for his most recent, Solo which is Phillips on his own.. In 1996, Just Pickin' was released; an album that gathered previously unreleased demos with Easy Mr Steve's Bootleggers, Mark Knopfler, Brendan Croker and other musicians. These recordings spanned nearly thirty years, from 1965 to 1981. Phillips usually tours solo, with occasional gigs with The Rough Diamonds. He has also played with other solo blues artists such as Ray Stubbs, Doug McLeod and Hans Theessink. He still plays regularly with Croker and appears occasionally with Knopfler and his band, especially for charity fund-raising gigs. When not touring, Steve and The Rough Diamonds play most Tuesday nights at the Grosvenor Hotel in Robin Hood's Bay, North Yorkshire. These informal evenings usually gather a good audience and often feature friends of Phillips and the band 'sitting in' for all or part of the gig. The music ranges from early blues to rock'n'roll, country to Chicago R&B. A live album of material recorded at the Grosvenor in 2007 was issued on 5 November 2012 under the name "Live at the Grosvenor". Steve Phillips & The Rough Diamonds released North Country Blues on 22 July 2013. In addition to his skills as a musician, Phillips has made a small number of high quality guitars and is also a noted landscape painter, specialising in scenes around his North Yorkshire home area. These paintings are notable for their treatment of North Yorkshire's distinctive but elusive light, and have a luminous quality which renders them instantly recognisable as his work. His album, Been A Long Time Gone, has a detail from one of his paintings on the sleeve.
A guitar collector as well as a maker, Phillips uses a wide number of them in his live performances. The National Style O which Knopfler uses in songs such as "Romeo & Juliet" and which became a Dire Straits emblem following its appearance on the cover of the Brothers in Arms album, was sold by Phillips in 1980. This is a list of some of the guitars Phillips has used in his live shows; his current main live guitars are marked + Acoustic guitars:
