At age 21, Holliday earned a degree in dentistry from the Pennsylvania College of Dental Surgery. He set up practice in Griffin, Georgia, but was soon diagnosed with tuberculosis, the same disease that had claimed his mother, having acquired it while caring for her. Hoping the climate in the American Southwest would ease his symptoms, he moved to that region and became a gambler, a reputable profession in Arizona in that day.

During the summer of 1878, Ed Morrison and another two dozen cowboys rode into Dodge City and shot up the town, galloping down Front Street. Afterwards, they vandalized the Long Branch Saloon and harassed the customers. Hearing the commotion, Wyatt Earp burst through the front door to find numerous guns pointing at him. Holliday was playing cards in the back and put his pistol to Morrison's head, forcing him and his men to disarm. Earp credited Holliday with saving his life that day, and the two were friends ever after.

When Holliday was 22, he went with some friends to a swimming hole on the Withlacoochee River. When they discovered it was occupied by another group of swimmers, Holliday became enraged, drew his pistol, and killed two of the youths as they scrambled from the swimming hole.

While dealing cards at John Shanssey's saloon in Fort Griffin, Texas, Doc met Mary Katharine "Big Nose Kate" Horony, a dance hall woman and occasional prostitute. "Tough, stubborn and fearless," she was educated, but chose to work as a prostitute because she liked her independence. She is the only woman with whom Holliday is known to have had a relationship.

His tuberculosis caused coughing spells at inopportune times, and his dental practice slowly declined. Meanwhile, Holliday discovered that he had a natural skill at gambling and soon relied on it as his principal source of income.

Holliday caught Bailey "monkeying with the dead wood" or the discard pile, which was against the rules. According to Earp, Holliday reminded Bailey to "play poker", which was a polite way to caution him to stop cheating. When Bailey made the same move again, Holliday took the pot without showing his hand, which was his right under the rules. Bailey went for his pistol, but Holliday whipped out a knife and stabbed him in the chest.

In a newspaper interview, Holliday was once asked if his conscience ever troubled him. He is reported to have said, "I coughed that up with my lungs, years ago."

Tombstone was one of the most lawless mining camps in the American West and had its share of criminal elements, but the Cochise County Cowboys were the most infamous. This band of horse thieves and stagecoach robbers was so well known, in fact, that they are largely responsible for the use of the term "cowboy" today. Back then, however, calling an honest rancher a "cowboy" was an insult.

During the gunfight, Holliday was injured when a bullet fired by Frank McLaury struck his holster and grazed his hip. Holliday chased after McLaury, exclaiming, "That son of a bitch has shot me and I am going to kill him."

Four days after the shootout, Ike Clanton filed murder charges. Holliday and Wyatt Earp were arrested and brought before a Justice of the Peace, but the charges were eventually dropped, and the lawmen were shown to have acted within the law.