Upon graduation from University of Mississippi, he joined the U.S. Navy. He was commissioned an ensign.
In early 1982 he was stationed at the Coos Head Naval Facility which had an allowance of twelve officers, ninety-five enlisted and 15 civilians. He was later given a bad fitness report by his executive officer, Lt. Cmdr. Marney Finch who transferred him to Washington D.C. later that year.
In 1984, Madsen was loaned to the National Security Agency by the Navy. He resigned from the Navy in 1985 as a lieutenant, having been passed over for promotion. Madsen described himself as the "most senior lieutenant in the Navy"
Between 1985 and 1989 Madsen held a series of jobs, first working for RCA as a government consultant on contracts for the National Security Agency (NSA). Later he worked for the Navy's Naval Data Automation Command as a civilian employee. After this Madsen briefly established his own consulting firm, then worked for the National Bureau of Standards, and later for the State Department. In 1990 Madsen joined Computer Sciences Corporation, working there from 1990 until 1997, when he joined the Electronic Privacy Information Center (EPIC) as a senior fellow. In late January 2005 Madsen left EPIC.
In 2005 Madsen began working as a free-lance journalist. He produces a blog called the Wayne Madsen Report. His articles have appeared in publications such as CorpWatch, CounterPunch, CovertAction Quarterly, In These Times, Multinational Monitor, The American Conservative, The Progressive and The Village Voice. His columns have appeared in the Atlanta Journal-Constitution, Columbus Dispatch, Houston Chronicle, Philadelphia Inquirer, Miami Herald and the Sacramento Bee. He appeared on WETA-TVs "White House Chronicle" in January, 2012.
In 2002 he suggested to the Guardian newspaper that the United States Navy had aided in an attempted overthrow of Venezuelan president, Hugo Chavez.
In 2003 he said that he had uncovered information linking the September 11 attacks to the government of Saudi Arabia as well as to Bush administration. In 2005, he wrote that an unidentified former CIA agent claimed that the USS Cole was actually hit by a Popeye cruise missile launched from an Israeli Dolphin-class submarine.
On 17 May 2005, Madsen testified regarding American policy in the Democratic Republic of the Congo (DRC) before a Subcommittee on International Operations and Human Rights hearing on the situation in the DRC. According to the news magazine New African, Madsens testimony was "was so revealing that the mainstream Western media...have refused to print it."
In 2005 he said that the pro-Israel lobby, the American Israel Public Affairs Committee, had pressured American politiCIAns to stay away from protests against the Iraq War.
Later that year he criticized the movie industry for indirectly causing suffering in Africa by promoting diamonds in movies like Breakfast At Tiffany's and Gentlemen Prefer Blondes. He included Leonardo DiCaprio, whose film Blood Diamond dealt with the issue, as well as Russell Simmons who is selling a line of "nonconflict diamonds." Madsen said about them, "It's a p.r. campaign. They should be saying, 'Don't buy diamonds at all.'"
In a 2008 ArabNews article, Madsen is quoted as suggesting that the criminal prosecution of New York State governor Eliot Spitzer was partly due to the Israeli intelligence agency Mossad.
On June 9, 2008 he reported that unnamed "GOP dirty tricks operatives" had found a Kenyan birth certificate registering the birth of Barack Obama, Jr. on August 4, 1961. "However, the registration is a common practice in African countries whose citizens abroad have families with foreign nationals." This birth certificate was a cornerstone of the "Kenyan Born" subset of the birther conspiracy theories, and Madsen's article was cited in a Washington state petition challenging Obama's eligibility to serve.
On April 25, 2009, Madsen reported that some unidentified UN World Health Organization officials and scientists believed the 2009 new H1N1 strain of swine flu virus appeared to be the product of U.S. military sponsored gene splicing, as opposed to natural processes. While it can not be ruled out that the virus was created in a research laboratory or vaccine factory, the most plausible explanation is that the virus is the result of modern farming techniques. New Scientist magazine cited the example of a H1N2 influenza pandemic in the 1990s that only affected pigs in the United Kingdom. This subtype of the H1N2 was also a reassortment (mix) of swine, human and avian strains.
In July 2009, Madsen released a report saying there was a "Q Group" within the National Security Agency tasked with plugging leaks of classified information and the monitoring and suppression of journalists who report on the NSA. He noted that with the approaching 10th anniversary of 9/11, the group have "made plans to stop any new revelations that would point to high-level U.S. and Israeli government involvement in the 9/11 attacks" that included the use of Wikileaks to identify potential "leakers".
In 2010, Madsen reported in the Pakistan Daily that unnamed sources suggested that the company formerly known as Blackwater, had been conducting false-flag operations in Pakistan that were blamed on the Tehrik-i-Taliban Pakistan.
In June 2012 Madsen self-published his sixth book. The book purports to be an expose of Barack Obama's rise in American politics and the CIA's role in his attaining the Presidency. He has been described by Andrew Sullivan of the Atlantic Monthly as a conspiracy theorist.