Tam was born in a Hakka family of Huiyang ancestry in Hong Kong on 15 December 1949. In 1968, when he was a 19-year-old window display designer, he joined a retail union. He later rose to be the union's vice-chairman in 1975 and become one of the vice-chairman of the Hong Kong Federation of Trade Unions, the largest pro-Communisttrade union in Hong Kong, with Cheng Yiu-tong in 1982. After the Sino-British Joint Declaration finalised which determined the Chinese sovereignty of Hong Kong after 1997 in December 1984, Tam was appointed by the Beijing government to the Hong Kong Basic Law Drafting Committee which responsible for the drafting of the mini-constitution of Hong Kong after 1997 in February 1985. In September 1985, he was first elected to the Legislative Council of Hong Kong in the first ever Legislative Council election as one of the Labour representatives, alongside with Pang Chun-hoi, president of the pro-KuomintangHong Kong and Kowloon Trades Union Council. During the Tiananmen Square protests of 1989, Tam and Cheng Yiu-tong joined the pro-democrats' demonstrations in support of the Tiananmen students. After the massacre on 4 June, he strongly condemned the Beijing authorities for the bloody suppression. However, he soon turned muted on the events with other pro-Beijing leftists. In 1992, he co-founded the pro-Beijing party the Democratic Alliance for the Betterment of Hong Kong with other local pro-Communist leaders. He became the founding vice-chairman of the party. In the 1995 Legislative Council elections, he gave up his Legislative Council seat in the Labour constituency to fight in Kowloon Southeast, one of 18 geographical constituencies elected by the public at large, but narrowly defeated by the Democratic Party candidate Fred Li Wah-ming, finishing a little over 2,000 votes behind.
SAR Legislative Council
In 1996, he was elected to the Provisional Legislative Council tightly controlled by Beijing on the eve of the unification by the 400-strong Selection Committee. In the first SAR Legislative Council election, he was elected through the New Territories West. In 1997, he was appointed by Chief Executive Tung Chee-hwa to the Executive Council which he served until 2002. He was also appointed chairman of the Elderly Commission from 1997 to 2005. In 1999, he was awarded the Gold Bauhinia Star by the government. After the 2003 District Council election the DAB's disastrous performance, the party chairman Tsang Yok-sing resigned from his office and succeeded by Ma Lik. He was re-elected to become the vice-chairman for the second time. In 2007, after being acting chairman for the preceding three weeks, he succeeded Ma Lik who died of cancer to become the party chairman. Under his chairmanship, the DAB received electoral victories in the 2007 and 2011 District Council elections. In the 2012 Legislative Council election, he led the party to achieve the greatest victory in history, bagging 13 seats in total, by deploying two and three tickets in Hong Kong Island and New Territories West respectively and having all the tickets being elected except for Lau Kong-wah's ticket in District Council. In February 2015, he announced that he will step down as DAB chairman to open the door for a new generation of leaders. On 17 April 2015, Starry Lee succeeded Tam in the party's leadership election. He received Grand Bauhinia Medal, the highest award in the Hong Kong medal system, by the government on 1 July 2016.
National People's Congress
He did not seek for re-election in the 2016 Legislative Council election along with three other party seniors Tsang Yok-sing, Ip Kwok-him and Chan Kam-lam. Tam Yiu-chung had been also a Hong Kong deputy to the Chinese People's Political Consultative Conference since 2003. In 2017, he switched from the CPPCC to run for the National People's Congress and succeeded Rita Fan to be the Hong Kong representative in the Standing Committee of the National People's Congress. In March 2018, he warned of the recent constitutional amendments in China meant Hongkongers who call for an end to "one-party dictatorship" in China, a slogan of the pro-democrats and one of the five pillars of the Hong Kong Alliance in Support of Patriotic Democratic Movements in China might be disqualified from running for local office. In the same month, Tam condemned Occupy Central co-founder Benny Tai for his remarks on the possibility of Hong Kong independence after the end of "dictatorship" in China. Tam urged Hong Kong to urgently implement Article 23 of the Basic Law to criminalise a series of acts including sedition, treason and subversion. He also asked if it was still appropriate for Tai to keep his job at HKU.