Sebastian was born to a poor family in Pittsburgh, but by his twenties had built a financial empire. Shaw Industries enjoyed many ties to the U.S. government, producing weapons for the military agencies. Among the company's defense contracts was the assignment to upgrade the Sentinel robots.
The tycoon was invited to join the elite Hellfire Club and quickly worked his way into a position within the Inner Circle. Shaw ousted the White King, then-current leader of the Circle, when the King failed in his plans to use the Circle to back Dr. Stephen Lang's first creation of the mutant-hunting Sentinel robots. Shaw became the Black King and leader of the Inner Circle and Hellfire Club. He was always accompanied by Tessa, his loyal and enigmatic aide, although in recent years she was revealed to have been a plant used by Professor X to keep tabs on Shaw and the developing Sentinel technology.
Sebastian kept the mutant nature of the Inner Circle secret from the rest of the Hellfire Club. Along with Emma Frost, the White Queen, Shaw used the organization's connections to further his goals of world domination through political and economical means. Shaw Industries even began a relationship with the United States' covert Project: Wideawake, manufacturing and developing Sentinel technology. Shaw had to overcome many attempts to usurp his leadership, including a challenge from renegade White Bishop (Donald Pierce), the infiltration of the Club by the X-Men, and overt hostility from Selene, the Black Queen.
Shaw’s Hellfire Club was destroyed when his son, Shinobi, amassed a private fortune of his own and bought out Shaw Industries from under his father's feet. Confronting Sebastian Shaw with this coup at his father’s retreat in Interlaken, Switzerland, Shinobi drove his father into a rage before using his mutant abilities to slay his father. Taking Shaw's ring as the symbol of his victory, he announced his triumph and claimed his father's place as Black King of the Inner Circle of the Hellfire Club.
Sebastian did not die, however, and spent some time recuperating and building back his resources by allying with his company’s Asian counterparts. Once he built up enough resources, he forcibly took back Shaw Industries. He also began rebuilding the Hellfire Club, using Tessa, Selene, and Holocaust. This new Hellfire Club discovered a recently-resurrected Madelyne Pryor, and Selene offered her a place among them after she had a falling-out with her resurrector, the X-Man. Sebastian and Madelyne soon fell in love. However, this was not to last. Shaw hoped to acquire futuristic technology used by Apocalypse, but he was betrayed by Madelyne, who warned Cable of Shaw’s plans in time for Cable to stop them. Madelyne left Sebastian to return to Nate Grey, the X-Man.
When Tessa had revealed that her years of service were all a cover for Xavier, Sebastian was determined to have revenge. He tried to frame her new team, the X-Men, for a murder of a Australian crime lord, which he also hoped would spark a turf war among the crime families that would ultimately leave himself in a position of power. The X-Men exposed Sebastian’s plot, however, with the help of the Red Lotus.
Sebastian Shaw later took on the title of the Hellfire Club’s Lord Imperial, and he approached Sunspot to offer him a place in the Club's Inner Circle. Once again, Donald Pierce appeared to challenge Shaw's title. Pierce was defeated with the combined efforts of Shaw, Sunspot, and the X-Men, with Pierce being decapitated in the process. Even so, Shaw was severely injured, and he stepped down to allow Sunspot to become the Lord Imperial.
Currently, Shaw is one of the prisoners of the new X-Men's base.