Gideon Welles, the son of Samuel Welles and Ann Hale, was born on July 1, 1802 in Glastonbury, Connecticut. His father was a shipping merchant and fervent Jeffersonian; he was a member of the Convention which formed the first state Connecticut Constitution in 1818 that abolished the colonial charter and officially severed the political ties to England. The constitution is also notable for having reversed the earlier Orders and provided for freedom of religion. He was a direct descendant of Gov.Thomas Welles, the Fourth Colonial Governor of Connecticut and the transcriber of the Fundamental Orders.

He married on June 16, 1835, at Lewiston, Mifflin County, Pennsylvania, Mary Jane Hale, who was born on June 18, 1817 in Glastonbury, Connecticut the daughter of Elias Hale and Jane Mullhallan. Her father, Elias, graduated fromYale College in 1794, and was a lawyer. She died on February 28, 1886 in Hartford, Connecticut, and was buired next to her husband in Cedar Hill Cemetery in Hartford, Connecticut. Gideon and Mary Jane were the parents of six children.

He was educated at the Episcopal Academy at Cheshire, Connecticut, and earned a degree at the American Literary, Scientific, and Military Academy at Norwich, Vt. (later Norwich University). He became a lawyer through the then-common practice of reading the law, but soon shifted to journalism and became the founder and editor of the Hartford Times in 1826. After successfully gaining admission, from 1827–1835, he participated in the Connecticut House of Representatives as a Democrat. Following his service in the Connecticut General Assembly, he served in various posts, including State Controller of Public Accounts in 1835, Postmaster of Hartford (1836–41), and Chief of the Bureau of Provisions and Clothing for the Navy (1846–49). Welles was a Jacksonian Democrat, who worked very closely with Martin Van Buren and John Milton Niles. His chief rival in the Connecticut Democratic Party was Isaac Toucey, whom Welles would later replace at the Navy Department. While Welles dutifully supported James K. Polk in the 1844 election, he would abandon the Democrats in 1848 to support Van Buren's Freesoil campaign.

Mainly because of his strong anti-slavery views, Welles shifted allegiance in 1854 to the newly-established Republican Party, and founded a newspaper in 1856 (the Hartford Evening Press) that would espouse Republican ideals for decades thereafter. Welles' strong support of Abraham Lincoln in 1860 made him the logical candidate from New England for Lincoln's cabinet, and in March 1861 Lincoln named Welles his Secretary of the Navy. Welles found the Naval Department in disarray, with Southern officers resigning en masse. His first major action was to dispatch the Navy's most powerful warship, the USS Powhatan, to relieve Fort Sumter. Unfortunately, Lincoln had simultaneously ordered the Powhatan to both Fort Sumter and Pensacola, Florida, ruining whatever chance Major Robert Anderson had of withstanding the assault. Several weeks later, when William H. Seward argued for a blockade of Southern ports, Welles argued vociferously against the action but was eventually overruled by Lincoln. Despite his misgivings, Welles' efforts to rebuild the Navy and implement the blockade proved extraordinarily effective. From 76 ships and 7600 sailors in 1861, by 1865 the Navy expanded almost tenfold. His implementation of the Naval portion of the Anaconda Plan strongly weakened the Confederacy's ability to finance the war through limiting the cotton trade, and while never completely effective in sealing off all 3,500 miles of Southern coastline it was a major contribution towards Northern victory. Lincoln nicknamed Welles his "Neptune". Despite his successes, Welles was never at ease in the United States Cabinet. His anti-English sentiments caused him to clash with William H. Seward, Secretary of State, and Welles's conservative stances led to arguments with Salmon P. Chase and Edwin M. Stanton, the Secretaries of the Treasury and of War, respectively.

After Lincoln's assassination Welles was retained by President Andrew Johnson as Secretary of the Navy. In 1866, Welles, along with Seward, was instrumental in launching the National Union Party as a third party alternative supportive of Johnson's reconciliation policies. Welles also played a prominent part in Johnson's ill-fated "Swing Around the Circle" campaign that fall. Although Welles admitted in his diary that he was dismayed by Johnson's behavior on the trip, particularly the president's penchant for invective and engaging directly with hecklers, Welles remained loyal to Johnson to the end, even congratulating him in 1875 when Johnson, now an ex-president, was launching a comeback political bid with his election to the U.S. Senate from Tennessee.

Welles ultimately left the Cabinet on March 3, 1869, having returned to the Democratic Party after disagreeing with Andrew Johnson's reconstruction policies but supporting him during his impeachment trial.

After leaving politics, Welles returned to Connecticut and to writing, editing his journals and authoring several books before his death, including a biography, Lincoln and Seward, published in 1874. Towards the end of 1877, his health began to wane. A streptococcal infection of the throat killed Gideon Welles at the age of seventy-five on February 12, 1878. His body was interred at Cedar Hill Cemetery in Hartford, Connecticut.

Welles' three-volume diary, documenting his Cabinet service from 1861–1869, is an invaluable archive for Civil War scholars and students of Lincoln alike, allowing readers rare insight into the complex struggles, machinations and inter-relational strife within the President's War Cabinet. Although offering a unique and quite non pareil portrayal of the immense personalities and problems facing the men who led the Union to ultimate victory, the first edition (published in 1911) suffers from rewrites by Welles himself and after his death, by his son; the 1960 edition is drawn directly from his original manuscript. The 1911 version of his diary may be found on Google Books. Two ships have been named USS Welles in his honor. The Dining Commons at Cheshire Academy and the Gideon Welles School in Glastonbury, Connecticut, are also named after him.