Waihee was born in Honokaa, Hawaii. He started his political career as a delegate to the Hawaii Constitutional Convention of 1978. He later served one term as a Democratic member of the Hawaii State House of Representatives from 1981-1983.
In 1982, Waihee was elected as Lieutenant Governor under Governor George R. Ariyoshi, serving in that capacity until 1986.
He then successfully ran for Governor, with State Senator Ben Cayetano as his running mate (Ariyoshi was barred from seeking another term in office), taking office in December 1986. They were both re-elected to second terms in 1990.
During much of Waihee's term, Hawaii experienced a boom in the tourism industry and increased foreign investment, especially from Japan.
The issue of Hawaiian sovereignty also took on increased importance as the 100th anniversary of the overthrow of Queen Liliuokalani occurred during Waihee's term.
Waihee left office in 1994, having served the maximum two terms in office, and was succeeded by Lt. Gov. Cayetano.
In 2002 he considered running for the U.S. House seat vacated by Patsy Takemoto Mink (who died September 28, 2002), but withdrew before the filing deadline.