Raised in rural Scotland, Milne became a carpenter. In 1809, at age 24, he was accepted by the London Missionary Society and given three years' theological training at their college in Gosport, England, before his ordination in 1812. He and his new wife, Rachel (Cowie) Milne, arrived on the China coast in 1813, joining Morrison, who had arrived there in 1807. In the next nine years, Milne learned the Chinese language and lived in Canton, Java, Penang, and Malacca. Even more than Morrison (who stayed in Canton), Milne was a cultural pioneer in this network of China-oriented posts ranging from the China coast to Southeast Asia. He translated the books Deuteronomy through Job for Morrison's famous Bible, and in his own right made a signal contribution to the beginnings of the writing, printing, and distribution of Christian literature in Chinese. In 1819 he published a tract The Two Friends, which became the most widely used Chinese Christian tract until the early twentieth century. Milne was also principal of the Anglo-Chinese College at Malacca from its founding until his death. His first convert (1815), Liang Fa, later became renowned as the author of the Christian literature that inspired Hung Hsiu-ch'uan and the Taiping Rebellion (1850-1864).
Milne was remarkably prolific for one who came to literary work so late in life, and twenty-one Chinese works are attributed to him. Several were of substantial length; one was a monthly magazine that ran from 1815 to 1822 and totaled several hundred pages. In addition, he produced two substantial books and a Malacca periodical in English. Predeceased by his wife in 1819, he was survived by a daughter and three sons, one of whom, William Charles Milne (1815-1863), later became an LMS China missionary (1839-1863).