Through his parents, he knew a number of major figures in the Scottish Enlightenment, including philosopher and historian David Hume, on whose recommendation he read Samuel Richardson's novel Clarissa when he was fifteen, and the dramatist John Home.

He served briefly in the Holy Roman Empire with the Scots Greys during the Seven Years' War, until a leg ailment – probably tuberculosis in the knee – forced him to return home.

In 1768, he purchased a command of a company in 70th Regiment of Foot, under the Colonelcy of his cousin Alexander Johnstone, and served with them in the West Indies until his lame leg again began to trouble him.

Shortly before, he had had the chance to shoot a prominent American officer, accompanied by another in distinctive hussar dress, but decided not to do so, as the man had his back to him and was unaware of Ferguson's presence.

Ferguson marched his troops to the site of Bose's infantry outpost, which comprised fifty men and was a short distance from Pulaski's main encampment.

Pulaski reported that Ferguson's Tories killed, wounded or took prisoner about 30 of his men in what the Americans called the Little Egg Harbor massacre.

On the evening of 18 August 1780 two hundred mounted Patriot partisans under joint command of Colonels Isaac Shelby, James Williams, and Elijah Clarke prepared to raid a Loyalist camp at Musgrove's Mill, which controlled the local grain supply and guarded a ford of the Enoree River.

The Battle of Musgrove Mill, 19 August 1780 occurred near a ford of the Enoree River, near the present-day border between Spartanburg, Laurens and Union Counties in South Carolina.

[18] Some Whig leaders briefly considered attacking the Tory stronghold at Ninety Six, South Carolina; but they hurriedly dispersed after learning that a large Patriot army had been defeated at Camden three days previous.

[19] In the wake of General Horatio Gates’ blundering defeat at Camden, the victory at Musgrove Mill heartened the Patriots and served as further evidence that the South Carolina backcountry could not be held by the Tories.

On 2 September, Ferguson and the militia he had already recruited marched west in pursuit of Shelby toward the Appalachian Mountain hill country on what is now the Tennessee/North Carolina border.

"[21] North Carolina Patriot militia leaders Isaac Shelby and John Sevier, from the Washington District (now northeast Tennessee), met and agreed to lead their militiamen against him.

Col. Benjamin Cleveland of North Carolina claimed Ferguson's white stallion as a "war prize” and rode it home to his estate of Roundabout.

He also wrote several articles, satirical in tone, for publication in Rivington's Royal Gazette, under the pseudonyms Egg-Shell, Memento Mori and John Bull.

In the novel Horse-Shoe Robinson (1835) by John Pendleton Kennedy, an historical romance set against the background of the Southern campaigns in the American War of Independence, fictional characters interact with Ferguson as he is en route to the climactic scene in which he is killed in the Battle of Kings Mountain.

James Pariah cleaves to his old Ferguson rifle, sometimes referring to it as his wife, having modified it with special actions such as a spring-loaded knife in the stock.

In the 2014 episode "Patriots Rising" of the television program The American Revolution, Ferguson is portrayed as having George Washington in his gunsight, but choosing not to shoot.

Ferguson's death is mentioned in the song "Old World Rules And Empire Takes" by Scottish folk singer Malcolm MacWatt.