Bhai Dayal Das was son of Bhai Mai Das and younger brother of martyr Bhai Mani Singh. His grandfather, Bhai Balu had attained martyrdom while fighting in Guru Hargobind's first battle against the Mughals. His ancestors belonged to Alipur near Multan. Bhai Mai Das came to Kiratpur for an audience with Guru Har Rai in 1657 CE. While returning, he left his three elder sons in the service of the Guru-ghar. Bhai Dayal Dass was fifteen when he entered in the service of the Guru.

Guru Tegh Bahadur made him incharge of the domestic affairs of Guru-ghar. In 1665 CE, when Guru Tegh Bahadur went to Assam from Patna, he left Bhai Dayal Das at Patna to look after the Sikh affairs. The birth of Guru Gobind Singh took place under his care and service and he looked after the Sahibzada till he reached Anandpur.

After sending the Kashmiri Brahmins back on the 25th May, 1675 CE, Guru Tegh Bahadur started on his journey to Agra for courting arrest. Before leaving Anandpur, he asked the Sikhs whether they wished for anything. All were unanimous in their reply, that they be granted permission to accompany the Guru to Agra." Bhai Dayal Dass was amongst those Sikhs who went along with the Guru to Agra. When the ninth Nanak was arrested by the imperial forces, three Sikhs were arrested with him, amongst whom was Bhai Dayal Das. The other two were Bhai Mati Das and Bhai Sati Das.

On the 9th November, 1675 CE, the qazis ordered that Bhai Dayal Das either agree to convert to Islam or be seated in a cauldron of boiling water. On hearing the ruling, Bhai Dayal Das bowed to the Guru and saying "Waheguru ! Waheguru !!" voluntarily towards the cauldron.

Before putting Bhai Dayal Dass in the cauldron of boiling water, the qazis said, "There is still time. Embrace Islam and save yourself from pains otherwise you will face greater agony than your companion. You have seen how cruelly he was sawn." Bhai Dayal Dass replied, "You could not harass my companion. Did you notice, how calmly he was meditating on the Word of the Guru when he was being sawn. Having made mockery of bodily pains, he had diffused into the Supreme Being. Hurry up and let my soul attain unity with the Lord." On hearing this reply, the executioners put him in the cauldron of boiling water. He sat there in the cauldron with an unwavering mind. His flesh gradually separated from his bones and his soul merged into the Supreme Being.