Sanders was born in Leon, Cattaraugus County, New York, to Ira and Freedom Sanders. His father was a farmer originally from Rhode Island, and his mother a native of Connecticut. Being a devout Methodist, Ira Sanders named his firstborn son after a hero of his faith, the founding president of Wesleyan University, Willbur Fisk. Family stories tell of a precocious child displaying a keen intellect and studious character. Wilbur attended the common schools in New York and afterward taught school himself. Following his mother's wishes, Sanders moved to Akron, Ohio, in 1854, where he continued teaching and studied law under his uncle, Sidney Edgerton. His Uncle Sidney, 16 years his elder, exercised a profound impact on his life. Also born in western New York, Edgerton had moved to Akron ten years earlier and rose to prominence under the tutelage of the veteran Ohio politician and lawyer Rufus P. Spalding. Edgerton likewise took Sanders under his wing. Sanders gained admission to the bar in 1856, and he and Edgerton soon entered a law partnership. Edgerton had become involved with the Free Soil Party in the 1840s, and by the mid-1850s, around the time Sanders joined him in Akron when his political activities had shifted to the fledgling Republican Party. Sanders followed his uncle's political development. On October 27, 1858, Sanders married Harriet P. Fenn, a native of Ohio. They had five children, but only three survived into adulthood: James, Wilbur E., and Louis.
He settled in that part of Idaho Territory, which later became Montana, where he engaged in the practice of law and also became interested in mining and stock raising. He was a young lawyer when he moved to Montana in 1863. He was there before courts were organized and, being one of the first permanent settlers, took a prominent part in bringing law and order to Montana. He was a prosecutor for the infamous Montana Vigilantes who took the law into their own hands after over one hundred men had been ambushed and murdered for their gold in Virginia City, Montana. In December 1863, Sanders led the prosecution of George Ives as the murderer of Nicolas Tiebolt in Nevada City, Montana. Ives was convicted and hanged on December 21, 1863. The George Ives trial initiated a period of vigilantism that eventually brought an end to thefts and murders by "road agents" in the Virginia City region. Sanders was one of the five original organizers of the Alder Gulch Vigilance Committee, which was formed on December 23, 1863 in Virginia City, Montana. In 1873, Sanders became a member of the Territorial Legislature. Also, he realized the importance of preserving early records and was for thirty years the president of the Montana Historical Society, established in 1865. He accumulated newspapers and documents in his law office. Sanders was a founding member of the Society of Montana Pioneers and served as its secretary and president. He was a Republican candidate for election in 1864, 1867, 1880, and 1886 as a United States Representative and was a member of the Territorial House of Representatives of Montana from 1873 to 1879. Upon the admission of Montana as a State into the Union, he was elected as a Republican to the US Senate and served from January 1, 1890, to March 3, 1893. While in the Senate, he was the chairman of the Committee on Enrolled Bills in the Fifty-second Congress. In the 1890s, Sanders represented the Chinese community in Butte, Montana, against labor unions boycotting Chinese businesses. Sanders died in Helena, Montana, at 71, and was interred in Forestvale Cemetery there. Sanders County, Montana, is named in his honor.
