Tamony was born at home in San Francisco, California, to Irish immigrants. He attended a parochial school at St. Peter's Church, and learned Latin and rhetoric from the progressive Father Peter Yorke, a supporter of modernizing the church, organized labor, and Irish independence. In 1905, Tamony's family bought a flat at 2876 24th Street in the Mission District where he lived for eighty years until his death at Saint Francis Memorial Hospital.
Tamony first became interested in etymology when he noticed various speech patterns. At the age of 20, he was diagnosed with tuberculosis and couldn't participate in sports; this led him to pay close attention to sports in newspapers, and from there to analyzing how people used words. His sources eventually included any kind of material he could collect such as posters and blues records.
He later became a real estate broker and notary, but for more than 50 years, Tamony collected examples of language, storing hundreds of cardboard cartons with file cards, newspaper clippings, conversation notes, and literature quotations. Folklorist Archie Green reminisced about the late Tamony as his mentor: "I look back at Peter Tamony as a keeper of a Celtic clan's lore, a bard in a magic three-storied castle - not in legendary Erin, but rather in San Francisco's Mission District."