Nishi was born in the Azabu district of Tokyo. He was the illegitimate third son of Tokujirō Nishi, a danshaku (baron under the kazoku peerage system). His mother was not married to Tokujirō and was forced to leave the house soon after giving birth. His father had various high-level positions in the Ministry of Foreign Affairs and Imperial Privy Council, leading up to Ambassador to China's Qing Dynasty during the Boxer Rebellion.
Nishi went to Gakushuin pre-school and, while in elementary school, repeatedly got into fights with students of nearby Bancho elementary school. In 1912, at the age of 10, he succeeded to the title of Baron upon the death of his father. In 1915, he entered Tokyo First Junior High School (now Hibiya High School) in accordance with the dying wishes of his father; his classmates included Hideo Kobayashi, future pre-eminent literary critic, and Hisatsune Sakomizu, who would be Chief Cabinet Secretary in 1945.
In September 1917, Nishi entered Hiroshima Army Cadet School, a military preparatory school established on Prussian models, and in 1920 took courses at Tokyo Central Cadet Academy. One of his classmates was Masanobu Tsuji, formerly head student of the Nagoya Academy. He completed his studies at Central Cadet School in six months in April 1920, due to the reorganization of the military schools, and began courses at the Imperial Japanese Army Academy. Midway through his studies, he was attached to the First Cavalry Regiment based in Setagaya, Tokyo. In 1924, he graduated from the Academy, the 13th of the 19 students in his class, and was commissioned a second lieutenant in October. He went on to the First Cavalry after graduating from Army Cavalry School. He was promoted to lieutenant in October 1927.
In 1930, Nishi encountered what would be his favorite horse, Uranus, while in Italy. As the army wouldn't pay for the horse, Nishi bought Uranus with his personal funds. Nishi and Uranus competed in competitions around Europe, doing well. In 1932, when Nishi was a first lieutenant, they participated in the 1932 Summer Olympics in Los Angeles, winning a gold medal in show jumping individual. This remains Japan's only Olympic medal to date in an equestrian event. His victory broke through the general hostility towards Japan that followed from the Mukden Incident and invasion of Manchuria. Westerners, especially Americans, referred to him as Baron Nishi. He was also popular among Japanese Americans, who were ostracized by American society in this period.
During his stay in Los Angeles, Nishi became the topic of conversation both for his love of driving convertibles around town and for becoming part of the social circle led by movie legend Charlie Chaplin, movie star couple Mary Pickford and Douglas Fairbanks.
After the Olympics, he was reassigned to the 16th Narashino Cavalry Regiment and promoted to be a cavalry instructor at the regimental school with the rank of captain, which he was promoted to in August 1933.
Nishi and Uranus participated in the 1936 Summer Olympics in Berlin, Germany but Nishi fell off his horse mid-course. There is speculation this was intentional and done for the benefit of host country Nazi Germany, with whom Japan would sign the 1940 Tripartite Pact, forming the Axis Powers. The 1936 Show Jumping individual event gold medal was won by Germany. Following this, Nishi was reposted to the Tokachi Subdivision of the department responsible for supply of military horses. He was promoted to major in March 1939.
In this period, Japan was cutting its cavalry forces and forming tank regiments. Nishi was reassigned the regimental commander of the 26th Tank Regiment, based in Mudanjiang, in northern Manchukuo on defensive duties. He eventually gained the rank of lieutenant colonel in August 1943.
In 1944, the 26th Tank Regiment was reassigned to the defense of Iwo Jima under the command of Lieutenant General Tadamichi Kuribayashi. On July 18, 1944, while en route from Pusan to Iwo Jima, the ship Nisshu Maru transporting the regiment was struck by torpedoes fired by submarine USS Cobia (SS-245). While only two soldiers were killed, all 28 of the tanks in the regiment were lost.
Nishi briefly returned to Tokyo to obtain replacement tanks, and eventually received 22 of them. While there, he borrowed the car of Daijiro Kawasaki, future CEO of Daihyaku Insurance (eventually bought out by Manulife Financial), a close friend and a son of the Kawasaki Heavy Industries zaibatsu. When he had a chance, he visited his horse Uranus, who remained at the Bajikōen Horse Grounds, Setagaya.
On Iwo Jima in 1945, Nishi commanded the 26th Tank Regiment under the Ogasawara Corps (IJA 109th Division). He would walk about the island wearing his Hermès brand riding boots and carrying his favorite crop. The regimental headquarters, which was located near the village of Maruman, was moved to the eastern part of the island when the battle began. Due to the topography of the island, some of the medium Type 97 Chi-Ha and light Type 95 Ha-Go tanks were placed in hull defilade (buried up to their turrets) and used as fortified emplacements, in particular, against the American M4 Shermans.
After extensive air and naval gunfire bombardment, the United States Marine Corps launched an amphibious assault on Iwo Jima starting February 19. The American forces, who knew that Nishi was an enemy commander, broadcast daily appeals for him to surrender, stating that the world would regret losing "Baron Nishi"; Nishi never responded to those appeals. The American intelligence officer responsible for this attempt was Sy Bartlett of the 315th Bomber Wing out of Guam, who would later write the novel and film screenplay Twelve O'Clock High. In 1966, Bartlett visited Nishi's widow in Tokyo and paid his respects at Yasukuni Shrine.
The circumstances of Nishi's death are unknown and subject to competing theories. One theory is that he found himself in the midst of enemy forces on the morning of March 21 and was killed by machine gun fire while moving to the regimental headquarters. Another is that he and his aide killed themselves with their pistols near Ginmyōsui or Futagoiwa. Yet another is that he was burnt to death by American flamethrowers on March 22, or that he and several subordinates carried out a final assault and were killed in action.
John C. Shively, in his novel The Last Lieutenant, recounts a story told by his uncle in which his platoon fires upon a group of Japanese soldiers during the night. In the morning, a body resembling Nishi's was found wearing riding boots and jodhpurs. Shively's uncle was almost certain that this was the body of Nishi.
Nishi was 42 years old at the time of the battle.
Nishi was posthumously promoted to the rank of colonel. His son Yasunori Nishi (currently vice president of the Association of Iwo-Jima), succeeded him as the 3rd Baron Nishi. His hereditary title was abolished during the American occupation of Japan after the war.
Ōno states, "Few people comprehended him and only Uranus understood him."
Uranus died one week after Nishi. In 1990, Uranus was commemorated at the War Horse Memorial in the History and Folklore Museum in Honbetsu, Hokkaidō.
In the 2006 film Letters from Iwo Jima, Baron Nishi was played by Korean-Japanese actor Tsuyoshi Ihara. The film portrays Nishi as being close friends with General Tadamichi Kuribayashi, but in reality, there was antagonism between the two. Nishi ignored Kuribayashi's prohibition on using precious water to wash tanks, as well as the general's orders to punish soldiers who did so. Regardless, the popularity (mainly in Japan) of both men as defenders of Iwo Jima grew. An anecdote repeated by Kakehashi Kumiko in the February 2006 issue of Bungei Shunju magazine is that in the final days of the battle, as the number of commanding officers who refused to put their men in caves increased, Nishi agreed that they should go out and fight together. In the 2006 movie, Nishi uses some of the scarce medical supplies on a wounded US Marine he is questioning. Ōno Kaoru's biography of Nishi gives credence to this as an actual event. The film also portrays Nishi as having taken his own life after being wounded and blinded during the battle.