Rabbi Yaakov Chaim was born in Baghdad on 10 Nissan 5614 (April 8, 1854). He was the only son of Rabbi Yosef Chaim, the leader of the city's Jewish community and author of the Ben Ish Chai, and of his wife Rachel, daughter of Rabbi Yehuda Somech.

He began his education in the local kuttab, the traditional elementary school. When he outpaced his classmates, his father took over his teaching, and Yaakov became his foremost disciple. He was known as a scholar from a young age, and his father mentions him often in his writings. Yet as long as his father was alive, he held no official or public post.

When the Ben Ish Chai passed away in 5669 (1909), the leaders of the Baghdad community chose Yaakov to succeed his father in the rabbinate. He took over the weekly sermons, which drew large crowds, managed the community's charity fund and also worked on behalf of the poor of Jerusalem. He founded a yeshiva for working men, called Midrash Beit Tako, and headed it. He was renowned as a master of practical Kabbalah.

He edited and published several of his father's writings. His works: Tzitzim U'Ferachim, a commentary on the Torah according to the four levels of PaRDeS, printed in Jerusalem in 5664 (1904) with his father's approbation; Zechut Avot on Pirkei Avot, which his father appended to his own Chasdei Avot; Gaon Yaakov, on the aggadot of the Talmud, published in Jerusalem in 5778 (2018); and Tal Orot, 39 short responsa appended to his father's Hod Yosef. His letters were printed in Nachalat Avot.

He served as rabbi of Baghdad for twelve years, until his passing on 12 Cheshvan 5681 (October 24, 1920). His son, Rabbi David Chaim, succeeded him.