Walter McIlhenny was born on October 22, 1910, in Washington, D.C. He enlisted in the Virginia National Guard on July 21, 1931, and transferred to the U.S. Marine Corps Reserve on May 30, 1935. McIlhenny was commissioned a 2d Lt in the Marine Corps Reserve on November 6, 1936, and served on the Marine Corps Reserve Rifle Team in the years preceding World War II, receiving the Gold Distinguished Marksman Badge in 1939. Lt McIlhenny went on active duty beginning January 31, 1942, and then attended the Basic School from February to April 1942, followed by service with Company B, 1st Battalion, 5th Marines of the 1st Marine Division at Marine Barracks New River, North Carolina, from April to May 1942, and then deployed to the Pacific Theater after beginning in June 1942. Capt McIlhenny landed at Guadalcanal with his unit in August 1942, and served as a Company Commander in combat there from August to December 1942. His next assignment was as Battalion Plans and Training Officer with Headquarters Company, 1st Battalion, 5th Marines at Camp Balcombe in Victoria, Australia, from January to September 1943, and then deployed to New Guinea from October to December 1943. Maj McIlhenny again served in combat at Cape Gloucester, New Britain, from December 1943 to January 1944, and then served as Regimental Plans and Training Officer at Pavuvu in the Russell Islands from May to December 1944, having participated in combat in the Palau Islands in September 1944. Maj McIlhenny next served as an instructor at Marine Barracks Quantico, Virginia, from January 1945 until he left active duty on December 26, 1945. Gen McIlhenny served with the 8th Marine Corps Reserve District in New Orleans, Louisiana, from December 1945 until he retired from the Marine Corps Reserve on November 1, 1959. Before the outbreak of World War II, Walter had worked for the family business at the McIlhenny Company, maker of Tabasco brand pepper sauce at Avery Island, Louisiana. He returned to the company after leaving active duty in 1946, and served as president of the McIlhenny Company from 1949 until his death on June 22, 1985. He also co-founded the Marine Military Academy in Harlingen, Texas, in 1965. Walter McIlhenny was buried at the McIlhenny family cemetery on Avery Island, Louisiana.

His Navy Cross Citation reads:

For extraordinary heroism and courage as Executive Officer of Co "B", 1stBn, 5thMar, 1stMarDiv, during a frontal assault upon a strongly fortified enemy Japanese position along the coast of Guadalcanal, Solomon Islands, August 27, 1942. After organizing a volunteer party to advance and evacuate the wounded from the hazardous position well forward of the Co., First Lieutenant McIlhenny, armed only with a rifle and while under heavy enemy mortar and machine gun fire, covered the advance and withdrawal of the rescue party, gallantly drawing enemy fire and silencing a Japanese machine gun nest. Although ill at the time and suffering from shock from concussion of an enemy mortar shell, he returned to a vantage point close to enemy lines and, in the face of fierce sniper fire, acted as an observer, relaying accurate information necessary for fire control until ordered by his superior officer to leave his post. His great personal valor, above and beyond the call of duty, not only made possible the rescue of 9 wounded men but also contributed to the success of Marine Mortar fire.