Born on December 3, 1899, the second son of the sake brewer Ikeda Goichiro in Yoshina, Toyota District, Hiroshima (today Takehara). After First Higher School he graduated from the Faculty of Law, Kyoto Imperial University (1925), and entered the Ministry of Finance. Young, he contracted a serious illness (pemphigus foliaceus) and was forced into long convalescence, but after his return served as Budget Bureau officer and other posts. He rose to director-general of the Tax Bureau in 1945 and administrative vice-minister of finance in 1947. In 1949, as minister of finance in the First Yoshida Shigeru Cabinet, he entered politics. He pushed through the super-balanced budget under the Dodge Line and brought inflation under control. He caused an uproar with his statement 'Let the poor eat barley' (1950), but enjoyed Yoshida's firm trust and became the leading figure of the Yoshida School. On July 19, 1960, he took office as the 58th prime minister after Kishi Nobusuke's resignation. Raising the banner of 'tolerance and patience,' he unified public opinion that had been split by the security treaty struggle, and on December 27 the cabinet adopted the 'National Income Doubling Plan,' setting a target of doubling GNP in ten years. In fact it was achieved in seven years, and the policy came to symbolize Japan's high-growth era. He served the 58th, 59th, and 60th terms in all, but stepped down the day after the closing of the Tokyo Olympics in 1964 on grounds of illness. He died of throat cancer at the National Cancer Center in Tsukiji, Tokyo, on August 13, 1965, at 65.

A friendly, common-touch personality known as a vigorous drinker. After his youthful bout with serious illness he took the view that 'you only live once' and developed a broad-shouldered and open-hearted character. At the same time he had strength with numbers and a deep grasp of economic policy cultivated in his Finance Ministry years. His skill was superb in turning politics from abstruse debate toward the practice of improving life, raising the plain slogan 'income doubling.' He leaned heavily on the 'Ikeda brains' — Shimomura Osamu, Ohira Masayoshi, Miyazawa Kiichi and others among his aides.

The Income Doubling Plan became the economic policy symbolizing Japan's postwar high-growth era, and even more than fifty years after Ikeda left office, it is still referred to in the 21st century in forms like 'Heisei income doubling.' National projects representing Japan's postwar leap — the 1964 Tokyo Olympics and the opening of the Tokaido Shinkansen — were realized under the Ikeda government. His political style of 'tolerance and patience' also healed public opinion split by the security treaty struggle and laid the foundation for the long-lasting LDP government. Ikeda's lineage was carried on by Ohira Masayoshi, Suzuki Zenko, Miyazawa Kiichi, and Kishida Fumio, and continues to this day as the 'Kochikai,' the conservative mainstream of the LDP. A Ikeda Hayato Memorial Hall has been built in Takehara, Hiroshima, his birthplace.