Growing up, Davies was surrounded by books and language. His father, Senator William Rupert Davies, was a newspaperman, and both parents were voracious readers. He, in turn, read everything he could. He also participated in theatrical productions as a child, where he developed a lifelong interest in drama.

He attended Upper Canada College in Toronto from 1926 to 1932 and while there attended services at the Church of St. Mary Magdalene. He would later leave the Presbyterian Church and convert to Anglicanism over objections to Calvinist theology. Davies later used his experience of the ceremonial of High Mass at St Mary Magdalene's in his novel The Cunning Man.

After Upper Canada College, he studied at Queen's University in Kingston, Ontario from 1932 until 1935. At Queen's he was enrolled as a special student not working towards a degree, and wrote for the student paper, The Queen's Journal. He left Canada to study at Balliol College, Oxford, where he received a BLitt degree in 1938. The next year he published his thesis, Shakespeare's Boy Actors, and embarked on an acting career outside London. In 1940 he played small roles and did literary work for the director at the Old Vic Repertory Company in London. Also that year Davies married Australian Brenda Mathews, whom he had met at Oxford, and who was then working as stage manager for the theatre.

Davies' early life provided him with themes and material to which he would often return in his later work, including the theme of Canadians returning to England to finish their education, and the theatre.

Davies and his new bride returned to Canada in 1940, where he took the position of literary editor at the magazine Saturday Night. Two years later, he became editor of the Peterborough Examiner in the small city of Peterborough, Ontario, northeast of Toronto. Again he was able to mine his experiences here for many of the characters and situations which later appeared in his novels and plays.

Davies, along with family members William Rupert Davies and Arthur Davies, purchased several media outlets. Along with the Examiner newspaper, they owned the Kingston Whig-Standard newspaper, CHEX-AM, CKWS-AM, CHEX-TV, and CKWS-TV.

During his tenure as editor of the Examiner, which lasted from 1942 to 1955, and when he was publisher from 1955 to 1965, Davies published a total of 18 books, produced several of his own plays and wrote articles for various journals.

For example, Davies set out his theory of acting in his Shakespeare for Young Players (1947) and then put theory into practice when he wrote Eros at Breakfast, a one-act play which was named best Canadian play of the year by the 1948 Dominion Drama Festival.

Eros at Breakfast was followed in close succession by Fortune, My Foe in 1949 and At My Heart's Core, a three-act play, in 1950. Meanwhile, Davies was writing humorous essays in the Examiner under the pseudonym Samuel Marchbanks. Some of these were collected and published in The Diary of Samuel Marchbanks (1947), The Table Talk of Samuel Marchbanks (1949), and later in Samuel Marchbanks' Almanack (1967). (An omnibus edition of the three Marchbanks books, with new notes by the author, was published under the title The Papers of Samuel Marchbanks in 1985.)

Also during the 1950s, Davies played a major role in launching the Stratford Shakespearean Festival of Canada. He served on the Festival's board of governors and collaborated with the Festival's director, Sir Tyrone Guthrie, in publishing three books about the Festival's early years.