Risto Ryti was born in the Huittinen district of Satakunta, one of seven sons. His parents were Kaarle Evert Ryti, a farmer, and Ida Vivika Junttila. Although he came from a peasant farming background, during his childhood Ryti hardly participated in work on the family's large farm, being a bookish and academically inclined boy. He was educated briefly at Pori Grammar School, and was then tutored at home, before enrolling in the University of Helsinki in 1906 to study law.

After graduating in 1909, Ryti returned to his roots in Satakunta, where he established himself as a lawyer in Rauma. During this period he became acquainted with Alfred Kordelin- one of Finland's richest men. Ryti became his lawyer, and eventually the two men became close friends. During this period Ryti also undertook further studies, becoming a Master of Laws in 1912. In the spring of 1914 he moved to Oxford to study maritime law, but the outbreak of World War I forced him to return to Finland, where in 1916 he married Gerda Paula Serlachius (1886–1984). They had three children, Henrik (1916- ), Niilo (1919-1997), and Eva (1922-2009).

In the period after the outbreak of World War I, before Finland achieved its independence, Ryti's business relationship with Kordelin grew even closer, and it appeared likely that Kordelin would ask Ryti to become general manager of his numerous business enterprises. However, in November 1917 Ryti and his wife witnessed the murder of Kordelin at the hands of a Russian Bolshevik.

During the Finnish Civil War Ryti played no active part, remaining in hiding with his family in the Red dominated Helsinki. Afterwards, however, he would become deeply involved in politics, being elected as a National Progressive member of Parliament, at the age of thirty. He served as a member of parliament from 1919 to 1924 and from 1927 to 1929. During his first few years in Parliament, Ryti served as chairman of the judiciary committee, and later the finance committee. He also served as a member of Helsinki City Council 1924-1927. Ryti's personal political success continued even after his liberal-oriented National Progressive Party shrank to a fringe party, because he was considered an expert especially in economic policy and, very importantly, as an impartial servant of the fatherland who refused to play partisan politics.

In 1921, the thirty-two-year-old Ryti was appointed as Finance Minister. He served in that position twice until 1924. In 1923 President Kaarlo Juho Ståhlberg appointed him as Chairman of the Bank of Finland, a post he remained in until he became Prime Minister in 1939.

In 1925 Ryti was also nominated as a presidential candidate but his opponents concentrated their votes on Lauri Kristian Relander. His support increased over the years but was never enough in elections. During the 1930s he withdrew from daily politics, but influenced economic policies. In 1934 he was awarded the British honour of Knight Commander of the Royal Victorian Order (KCVO) due to his great merits in Anglo-Finnish relations.

Ryti was selected as prime minister at the beginning of the Winter War. He tried to concentrate on a realistic analysis of the situation, instead of pessimism or overt optimism. He persuaded the rest of the Cabinet to settle for peace and was the one to sign the Moscow Peace Treaty on March 13, 1940. The peace, in which Finland lost large land areas and faced the burden of resettling 400,000 refugees, was generally considered crushing. In the following precarious times Ryti bore the heavy responsibilities of state leadership together with Field Marshal Mannerheim, industrialist Rudolf Walden and the Social Democratic leader Väinö Tanner as President Kyösti Kallio was struck by illness. As a result, the duties of the president were transferred to prime minister Ryti. Kallio never recovered and as the exceptional circumstances, such as the lack of a permanent place of residence by many Karelian refugees, prevented the election of presidential electors, a constitutional amendment was enacted by the Parliament of Finland to enable the electors of 1937 to elect a successor to Kallio. Ryti won the election with 288 votes out of 300. On the day of his retirement, December 19, 1940, Kallio suffered a lethal stroke during a farewell gathering. During Ryti's presidency the powers of the Commander-in-Chief remained with Mannerheim.

Finland's changed policy from a Scandinavian orientation up to, and during, the Winter War, to a German orientation after the Winter War, was not in the least pursued by the convinced Anglophile Risto Ryti. Traditionally Finland had been associated with Britain by stronger commercial ties, but as the Baltic Sea was dominated by the Germans, lost markets had to be found elsewhere, and Germans were willing to trade. The relatively limited space given to Nazi German propaganda and ideology, or their domestic sympathizer fringe groups in Finland, can probably be seen as one of the many important joint contributions of Ryti, Tanner and Mannerheim. Ryti's government must also be credited for the fact that Finland remained a genuine democracy unlike any other continental European country that participated in WWII. In August 1940 Ryti also agreed to secret military cooperation with Germany, in order to strengthen Finland's position vis-à-vis the threatening Soviet Union. The cooperation begun in late 1940 ultimately developed in 1941 into preparations for re-annexation of the territories lost after the Winter War, in case Nazi Germany would realize the rumoured plans for an assault on the Soviet Union. The Continuation War, when it commenced, would also come to include occupation of East Karelia, which Nationalist circles had championed since the 1910s. When Germany's assault on the Soviet Union began in June 1941, Finland remained formally neutral until Soviet air raids gave an expected reason to fulfill the invasion plans some days later. Finnish troops soon regained the territory lost in the Winter War and a substantial buffer zone beyond. A substantial number of MP's were not excited by the idea of crossing the old borders, but obviously Risto Ryti convinced Väinö Tanner and the Social Democrats to remain in the Cabinet despite their opposition to the conquest of East Karelia.

Ryti's mandate as President was intended to extend only through the rest of Kallio's term, i.e., to 1943, but as the government could not organize elections during the Continuation War, the electors from 1937 gathered to re-elect him. This exceptional procedure was mandated by a constitutional amendment passed by the Parliament of Finland. To prepare Finland for the eventual peace negotiations with the Soviet Union, the government was changed: Conservative Edwin Linkomies became Prime Minister, some other ministers also came to the government and the Patriotic People's Movement was excluded from the government.

The Soviet Union's major counter-offensive began in June 1944, in a situation when Finland's relations to Germany were strained due to earlier attempts to secure a separate peace. Finland was in dire need of food, but in particular of weapons and ammunition, as the Nazi Foreign Minister Joachim von Ribbentrop demanded guarantees that Finland would not again seek a separate peace. Ryti gave this guarantee, expressed as his personal guarantee that Finland under his presidency would not. Soon after the situation was stabilized, Ryti resigned and peace negotiations could begin again, this time from a stronger position although most territorial gains had been lost by that time. Probably neither Hitler nor any other German authorities read Ryti's letter carefully enough, because Finland's decision at the start of September 1944 to end its informal military alliance or "brotherhood-in-arms" with Germany surprised and angered them. None of them probably thought that Ryti would resign any time soon, and thus give his successor a free hand to break ties with Germany and to start peace negotiations with the Soviet Union.

After the war Ryti attempted to return to the Bank of Finland. However, in 1945 Finnish communists and the Soviet Union demanded he should be tried as "responsible for the war". This came as a shock to the Finnish people who held Ryti in high esteem. After considerable pressure from the Soviet Union, Ryti was sentenced to 10 years' imprisonment, in a trial widely held to be illegitimate and a miscarriage of justice from the Finnish perspective. Along with Ryti, seven other high officials were sentenced to prison, although for shorter terms. Despite Ryti and his fellow convicts not being treated particularly badly in prison, Ryti's health failed during his sentence. Most of his stomach had to be removed due to some tumour or other disease; in addition, he developed arthritis during the first winter of imprisonment. He was pardoned by President Juho Kusti Paasikivi in 1949. In 1952, he attended a university students' celebration where he accepted a badge of honour. In May 1956, just five months before his death, he received an honorary doctorate in political science from the Helsinki University. Risto Ryti died in October 1956 and was buried with full presidential honors.

In 1994, a statue of Ryti was unveiled near the Finnish Parliament House. In 2004, in the YLE TV-series Suuret Suomalaiset (Greatest Finns) Risto Ryti got the second highest number of votes.