Witte's father Julius Witte came from a Lutheran Baltic German (originally Dutch) family and had been member of the knightage of the City of Pskov. He converted to Orthodoxy upon marriage with Witte's mother Catherine Fadeyev. Sergei Witte's maternal grandfather was Andrei Mikhailovich Fadeyev, a Governor of Saratov and Privy Councillor of the Caucasus, his grandmother was Princess Helene Dolgoruki, and the mystic Madame Blavatsky was his first cousin. He was born in Tiflis, Georgia and raised in the house of his mother's parents. He finished Gymnasium I in Chisinau and graduated from Novorossiysk University in Odessa with a degree in mathematics.

After graduating he then spent the greater part of the 1870s and 1880s involved in private enterprises, particularly the administration and management of various railroad lines in Russia.

Witte served as Russian Director of Railway Affairs within the Finance Ministry from 1889 - 1891; and during this period, he oversaw an ambitious program of railway construction which included the building of the Trans-Siberian Railway. The Tsar appointed him acting Minister of Ways and Communications in 1892.

Nicholas II transferred Witte to the position of chairman of the Committee of Ministers in 1905, a position he held until 1906. In an attempt to keep up the modernization of the Russian economy Witte called and oversaw the Special Conference on the Needs of the Rural Industry. This conference was to provide recommendations for future reforms and the data to justify those reforms.

Witte's opposition to Russian designs on Korea caused him to resign from government in 1903. He returned to the forefront in 1905, however, when he was called upon by the Tsar to negotiate an end to the Russo-Japanese War. He was sent as the Russian Emperor's plenipotentiary and titled "his Secretary of State and President of the Committee of Ministers of the Emperor of Russia" along with Baron Roman Rosen, Master of the Imperial Court of Russia to the United States, where the peace talks were being held. Witte is credited with negotiating brilliantly on Russia's behalf. Despite losing dramatically on the battlefield, Russia lost very little in the final settlement. For his efforts, Witte was created a Count. But the loss of the war would perhaps spell the beginning of the end of Imperial Russia. After this diplomatic success, Witte was brought back into the governmental decision-making process to help deal with the civil unrest following the war and Bloody Sunday. He was appointed Chairman of the Council of Ministers, the equivalent of Prime Minister, in 1905. During the Russian Revolution of 1905, Witte advocated the creation of an elected parliament, the formation of a constitutional monarchy, and the establishment of a Bill of Rights through the October Manifesto. Many of his reforms were put into place, but they failed to end the unrest. This, and overwhelming victories by left-wing political parties in Russia's first elected parliament, the State Duma, forced Witte to resign as Chairman of the Council of Ministers.

Witte continued in Russian politics as a member of the State Council but never again obtained an administrative role in the government. Just prior to the outbreak of World War I, he urged that Russia stay out of the conflict. His warning that Europe faced calamity if Russia became involved went unheeded, and he died shortly afterwards.

Witte's reputation was burnished in the West when his memoirs were published in 1921. The original text of these memoirs are held in Columbia University Library's Bakhmeteff Archive of Russian and East European History and Culture.