Of Irish descent, Phillips was born in Massachusetts, and graduated from Winchester High School in 1973. Phillips enrolled at the University of Massachusetts Amherst and planned to study international law but transferred to the Massachusetts Maritime Academy, from which he graduated in 1979. During his schooling, Phillips worked as a taxi driver in Boston.
On April 6, 2009, the U.S. Maritime Administration, following NATO advisories, released a Somalia Gulf of Aden "advisory to mariners" recommending ships to stay at least 600 nautical miles (1,100 km; 690 mi) off Somalia's coast of east Africa. With these advisories in effect, on April 8, 2009, four Somali pirates boarded the Maersk Alabama when it was located around 240 nmi (440 km) southeast of the Somalian port city of Eyl. With a crew of 20, the ship had departed from Salalah, Oman en route to Mombasa, Kenya. The ship was carrying 17,000 metric tons of cargo, of which 5,000 metric tons were relief supplies bound for Kenya, Somalia, and Uganda. "In that area of the world, any blip on your radar is of concern," said Phillips, "I always told my crew it was a matter of when, not if."
According to Chief Engineer Mike Perry, the crew sank the pirate speedboat shortly after the boarding by continuously swinging the rudder of the Maersk Alabama, thus swamping the smaller boat. As the pirates were boarding the ship, the crew members locked themselves in the engine room. The crew later overpowered one of the pirates. The crew attempted to exchange the captured pirate, whom they had kept tied up for twelve hours, for Phillips. According to a crew member, Phillips and the pirates got into the ship's rescue boat, but it would not start, so the crew dropped a lifeboat and met the pirates to switch prisoners and boats. The captured pirate was released, but the pirates left with Phillips in the lifeboat before the crew could take action. The lifeboat was carrying ten days of food rations, water, and basic survival supplies.

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