William was a younger son of Landgrave Philip of Hesse-Philippsthal from his marriage to Catherine Amalie (1654–1736), daughter of Count Karl Otto of Solms-Laubach.
Wilhelm founded the non-sovereign line Hesse-Philippsthal-Barchfeld of the House of Hesse in 1721, after the death of his father, who had left him Barchfeld and Herleshausen in his will. Between 1690 and 1732 he built the baroque Wilhelmsburg Castle with three wings, which was named after him, in Barchfeld.
William married on 31 October 1724 in Hoym with Princess Charlotte Wilhelmine (1704–1766), daughter of Prince Lebrecht of Anhalt-Bernburg-Schaumburg-Hoym, with whom he had the following children:
Charlotte (1725–1798)
married in 1765 Count Alfred August of Ysenburg and Büdingen in Waechtersbach (1717–1782)
William (1726–1726)
Frederick (1727–1777), who succeeded him as Landgrave of Hesse-Philippsthal-Barchfeld
married in 1772 Countess Sophie Henriette of Salm-Grumbach (1740–1800)