After brief collaborations with Chubby Jackson and Bill Harris, he teamed in 1946 with pianist Lennie Tristano, a three-year partnership that yielded the most inspired and influential work of the guitarist's career. Across a series of duet and trio recordings, Tristano and Bauer proved uniquely complementary musicians, with Bauer's razor-honed guitar navigating Tristano's intricate arrangements with nimble ease. Together, both men were cited as leaders of the growing bop movement, and on recordings like "Intuition" and "Digression," they effectively created free jazz.

After ending his partnership with Tristano, Bauer found another kindred spirit in alto saxophonist Lee Konitz. Their collaboration reached its creative apex with the 1951 session Duet for Saxophone and Guitar, which expanded upon its unusual instrumental pairing to essentially redefine the role of jazz guitar. By now Bauer was regularly winning awards from the magazines Down Beat and Metronome, but he retained the humility and disdain of the limelight that would ultimately serve to marginalize his contributions to contemporary music -- only in 1956 did he cut Plectrist, the first and last studio recording released under his own name.

Bauer was instead happiest and most effective as a sideman, working with the likes of Milt Hinton and Pete Candoli. He also served with the NBC Staff Orchestra and taught at the New York Conservatory of Modern Music. During the last three decades of his life Bauer rarely recorded or performed live, instead channeling his energy into the Billy Bauer Guitar School, which he operated from a small office in Roslyn Heights, NY. In 1997 he published his autobiography, Sideman, and continued offering private lessons until just weeks prior to his death from pneumonia on June 17, 2005.