Reg Saunders was born on the Framlingham Aboriginal Reserve in the district of Portland in Victoria, the eldest son of Wannan and Chris Saunders, an itinerant worker. In 1924, Saunders's mother died giving birth to a third child. Following his wife's wishes, Chris Saunders declined the advice to have his sons adopted, and instead placed them in the care of their maternal grandparents at Lake Condah Reserve. There Chris Saunders was able to spend time with his sons between jobs.

Saunders achieved academic success at the one-teacher school at Lake Condah and was offered further education at Hamilton High School and later by correspondence at Scots College. Like his father, Saunders achieved sporting success in football as well as in boxing, cricket and swimming.

Saunders left school with a Merit Certificate at the end of eighth grade and went to work, like his father, in the timber industry. There he successfully protested the custom of withholding the pay of Aboriginal workers and ensured that he was paid for his work in the industry.

At the outbreak of the Second World War, Saunders enlisted in the AIF. His father and uncle had served in the First World War. Saunders was successful in the Army and quickly promoted to Lance Corporal and Sergeant. Saunders saw active service in Northern Africa and the Mediterranean, and when the Allies evacuated Crete in June 1941, Saunders was left behind on the island. He managed to avoid capture by the Germans by employing skills of bushcraft learned as a child, and with the help of the people of Crete. Saunders was eventually evacuated in May 1942.

On his way to New Guinea to fight the Japanese, Saunders learned that his brother, Harryb), had been killed in active service in New Guinea. On leave at the end of 1943, Saunders married Dorothy Banfield and soon after he was recommended for and received a King's Commission, the first Indigenous person to hold such a position in the Australian Army. As a Lieutenant, Saunders began to attract some media attention, including a feature article in the Australian Women's Weekly.

Saunders was 25 when he returned to Melbourne at the end of the war. Due to racism, he found it difficult to obtain a position that would allow him to use his skills and experience, or to provide adequately for his family. Saunders worked as a tram conductor and in a foundry before landing a better position as a pay clerk on the wharves. Saunders, his wife and their two daughters moved to Sydney due to Dorothy's ill health. They had a third daughter in 1949. Saunders suffered post-war trauma; however, he re-enlisted in 1950 to serve in Korea. There he was part of a critical battle for which his unit received a United States Presidential Citation. Saunders was nominated for a personal citation for his role in the action but declined it in deference to his unit's role as a whole.

After returning from Korea in 1951, Saunders was posted to Queensland where he trained recruits and then to Watsonia to train national servicemen. This role he found less satisfactory and he did not support the training methods used. He resigned in 1954 and became active in Aboriginal rights campaigns and in the Returned Servicemen's League. His first marriage having ended around the time he moved to Watsonia, in 1954 Saunders married Pat Montogomery, an Irish nurse.

After trying his hand at farming in the Gippsland and labouring in Sydney, Saunders gained a permanent position as a liaison officer with the Department of Aboriginal Affairs in Canberra where he worked successfully for seventeen years. In 1985, Saunders was appointed to the Council of the Australian War Memorial.

He was the father of Glenda Humes and a descendent of Reg RawlingsV) (qq.v.).