Kenneth was born on the 21st of October, 1910 in Pawnee, Oklahoma, and would later move to Danville, Illinois with his parents. When he was 22 years old, he joined the 130th Infantry Regiment of the Illinois National Guard and also went to the University of Illinois. Shortly after graduating, Kenneth received his commission to second lieutenant and transferred to the US Marine Corps. He then went to Basic School at the Marine Barracks in Philadelphia, Pennsylvania, and then joined the 5th Marine Regiment at Quantico, Virginia. Kenneth was assigned to the USS Pennsylvania as the Detachment and Battery Officer and on the 19th of January, was promoted to first lieutenant.

In 1940 and 1941, Kenneth was a range officer at Quantico, an assistant to the training officer at Marine Corps Recruit Depot Paris Island, and a short assignment in Guantanamo Bay before being promoted to captain in March of 1941. He joined the 5th Marine Regiment at Quantico in June of 1941 as their company commander before the unit was ordered to Marine Corps Recruit Depot San Diego in April of 1942. By the end of the month, they were in Tutuila, American Samoa and Kenneth was promoted to Major.

The 1st Marine Raider Battalion was part of the Invasion of Tulagi of the Soloman Islands and Kenneth received a Silver Star for leading an assault on a Japanese machine gun nest and the unit then moved on to Guadalcanal. It was his actions as company commander of Company C during the Battle of Edson's Ridge, also known as the Battle of the Bloody Ridge, that would earn him the Medal of Honor. The citation reads:

For extraordinary courage and heroic conduct above and beyond the call of duty as Commanding Officer of Company C, First Marine Raider Battalion, during the enemy Japanese attack on Henderson Field, Guadalcanal, Solomon Islands, on September 12–13, 1942. Completely reorganized following the severe engagement of the night before, Major Bailey's company, within an hour after taking its assigned position as battalion reserve between the main line and the coveted airport, was threatened on the right flank by the penetration of the enemy into a gap in the main line. In addition to repulsing this threat, while steadily improving his own desperately held position, he used every weapon at his command to cover the forced withdrawal of the main line before a hammering assault by superior enemy forces. After rendering invaluable service to the Battalion Commander in stemming the retreat, reorganizing the troops and extending the reserve position to the left, Major Bailey, despite a severe head wound, repeatedly led his troops in fierce hand to hand combat for a period of ten hours. His great personal valor while exposed to constant and merciless enemy fire, and his indomitable fighting spirit inspired his troops to heights of heroic endeavor which enabled them to repulse the enemy and hold Henderson Field. He gallantly gave his life in the service of his country.

Even through all of this, Kenneth continued to lead his men and on the 26th of September, 1942, he was leading an attack on the Japanese at the Matanikau River where he was killed in action at the age of 31 years old. Kenneth Dillon Bailey was initially buried on Guadalcanal but in June of 1948, his remains were reinterred in the Spring Hill Cemetery and Mausoleum in Danville, Illinois.