Shimamura Hayao graduated from the Naval Academy (1880) at the top of his class.
Selected for staff work, Shimamura served as a junior officer for several years during the mid-1880s. Studying abroad in Great Britain, he served as a from 1888 to 1891. After his return to Japan, he was assigned as chief gunnery officer on the Takao. He was promoted to lieutenant commander in 1894.
During the First Sino-Japanese War, Shimamura was assigned as a staff officer of the Standing Fleet from August 1894 to April 1895 and involved in planning the column formations of the battle. He was later wounded while on board the cruiser Matsushima during the Battle of the Yalu on September 17, 1894.
After serving in various staff positions after the war, (including naval attaché to Italy in 1894) Shimamura was promoted to captain in 1899 and commanded the cruiser Suma and marines during the Battle of Tientsin during the Boxer Rebellion. From 1902-1903, he was captain of the battleship Hatsuse.
Promoted to rear admiral on June 6, 1904, shortly before the Russo-Japanese War, Shimamura was made Chief of Staff of the 1st Fleet. In command of the 2nd Fleet's Second Battle Division, Shimamura was aboard his flagship, the cruiser Iwate during the Battle of Tsushima on May 26, 1905.
After the war, he was assigned command of the Training Fleet and became Commandant of the Imperial Japanese Naval Academy from 1906-1908. He became Commandant of the Naval War College (Japan) from 1908-1909. He was subsequently Commander in Chief of the 2nd Fleet from 1909-1911, Commander in Chief of the Sasebo Naval District from 1911-1914, and Chief of the Imperial Japanese Navy General Staff during World War I from 1914-1920. Shimamura was initially opposed to the deployment of the Imperial Japanese Navy to the Mediterranean under the Anglo-Japanese Alliance, as he felt that this would weaken Japan's defenses against the "true threat" of the United States.
Promoted to full admiral on August 28, 1915, Shimamura was ennobled as a danshaku (baron) under the kazoku peerage system in 1916.
Following his death in 1923, Shimamura was posthumously promoted to the rank of Fleet Admiral. His grave is at the Aoyama Cemetery in Tokyo.