Hay was born in Worthing to American parents. The family moved to Chile in 1914 and subsequently to the United States, settling in Los Angeles in 1919. At the age of 11, Hay read Edward Carpenter's book The Intermediate Sex, which showed him that other people shared his attraction for his own sex. Hay became a communist, a supporter of Native American culture, and a proponent of gay men as an oppressed cultural minority.
In 1950 he was one of the founders of what was later called the Mattachine Society, the first nationwide gay organisation. He was later involved with the Gay Liberation Front and the Radical Faeries. His partner from 1963 to his death was the inventor John Burnside.