Ian Fairbairn was the son of Steve Fairbairn and his wife Eleanor née Sharwood. He was educated at Eton, and then attended Royal Military College Sandhurst, and was commissioned as a second lieutenant in the Royal Horse Guards on 11 November 1914. He was not posted to France on 19 May 1915, having just been promoted to lieutenant on 14 May. He transferred to the Guards Machine Gun Regiment on 12 August 1918, and was promoted captain on 18 October 1918. He ceased to be employed with the Guards Machine Gun Regiment on 31 January 1919, and resigned his commission on 1 May 1919. He was badly wounded during the war.
He was the Unionist candidate for Burnley (his first father-in-law's old constituency) in the 1924 and 1929 general elections; on both occasions he came second behind Labour's Arthur Henderson.
In 1920 he was runner up in Silver Goblets at Henley Royal Regatta in a coxless pair with Bruce Logan. In 1923 Fairbairn stroked the Thames crew which won the Grand Challenge Cup, and was again stroke in the Thames crew that made up the eight rowing for Great Britain at the 1924 Summer Olympics, finishing fourth. He was Captain of Thames in 1933, a Vice President from 1927–67 and President from 1967 until his death a year later. He was a Steward of Henley Royal Regatta from 1948 until his death.
Fairbairn pioneered the unit trust industry at M&G Investments which he joined in 1931. He believed that investments in equities should be available to everyone so that there was a wider ownership of stakes in the nation's economy.
He married Cynthia Isabelle Theresa Arbuthnot, daughter of Gerald Arbuthnot MP for Burnley on 27 July 1925. They had two children and were divorced in 1941 and he married a second time in 1941 to Esmée V. H. Bethell. She was killed by a V-1 flying bomb in 1944. Fairbairn appears to have held a reserve commission during the Second World War, but it is not clear if he saw any service. From 1943 he was chairman of M&G.
In 1955 he became chairman of the parent group White Drummond. In 1961 created the Esmée Fairbairn Charitable Trust as a memorial to his second wife, transferring his personal holding in White Drummond to the trust – through this investment it became one of the largest charities in the UK.