Cradock was educated at Alderman Wraith Grammar School, in the town of Spennymoor, in County Durham, in North-East England, and at St. John's College, Cambridge, where he studied Law and was President of the Cambridge Union.
Cradock was born in Byers Green, County Durham. He joined the British Foreign Office in 1954 and served as Counsellor, then Charge d'Affairs in Beijing from August 1968 to February 1969 and later as Head of the Assessments Staff in the Cabinet Office. From 1978 to 1984 he was the Ambassador in Beijing, where he opened and led the negotiations on the Hong Kong Joint Declaration. From 1984 to 1992 he was the Prime Minister's Foreign Policy Adviser. From 1985 to 1992, he was also the Chairman of the Joint Intelligence Committee. Sir Percy retired from government service in 1992.
He was an Honorary Fellow of St. John's College, University of Cambridge, where, as stated above, he studied Law as an undergraduate, and became President of the Cambridge Union, his history of which, Recollections of the Cambridge Union: 1815-1939, was published in 1953. He was made a Privy Councillor in 1993.
From 1992-97, the pro-Chinese Cradock was the most prominent critic of the liberalising policies of Chris Patten, the last Governor of Hong Kong. He represented a camp within the British establishment that believed the democratisation of the colony would only cause the government of China to crack down harder on public freedoms after the People's Republic took sovereignty on 1 July 1997.
Cradock left the public spotlight in the final years of his life. He took a job as a non-executive director of the South China Morning Post in 1996, and continued working on the board until 2000, when he retired due to poor health.
Cradock was featured in episodes of 'Getting Our Way' a BBC TV series aired in 2010. The presenter was former British Ambassador to the US, Sir Christopher Meyer, who looked back at 500 years of intrigue and adventure to construct a history of British diplomacy from the inside
Cradock married Birthe Marie Dyrlund, a staffer at the Foreign Office.