Satō was born in Tabuse, Yamaguchi Prefecture, and studied German law at Tokyo Imperial University. In 1923, he passed the senior civil service examinations, and in the following year, upon graduation, became a civil servant in the Ministry of Railways. He served as Director of the Osaka Railways Bureau from 1944 to 1946 and Vice-Minister for Transportation from 1947 to 1948.

Satō entered the Diet in 1949 as a member of the Liberal Party.

He was appointed Minister of Postal Services and Telecommunications from July 1951 - July 1952. Sato gradually rose through the ranks of Japanese politics, becoming Chief Cabinet Secretary to Prime Minister Shigeru Yoshida from January 1953 to July 1954. He later served as Minister of Construction from October 1952-February 1953. After the Liberal Party merged with the Japan Democratic Party to form the Liberal Democratic Party, Satō served as chairman of the party executive council from December 1957 to June 1958. Satō became Minister of Finance in the cabinets of Nobusuke Kishi (his brother) and Hayato Ikeda. From July 1961-July 1962, Satō was Minister of International Trade and Industry. From July 1963-June 1964 he was concurrently head of the Hokkaidō Development Agency and of the Science and Technology Agency, and was also state minister in charge of organizing the 1964 Summer Olympics held in Tokyo.

Satō succeeded Ikeda after the latter resigned due to ill health. His government was longer than many, and by the late 1960s he appeared to have single-handed control over the entire Japanese government. He was a popular prime minister due to the growing economy; his foreign policy, which was a balancing act between the interests of the United States and China, was more tenuous. Student political radicalization led to numerous protests against Satō’s support of the United States-Japan Security Treaty, and Japanese tacit support for American military operations in Vietnam. These protests expanded into massive riots, which eventually forced Satō to close the prestigious University of Tokyo for a year in 1969.

After three terms as prime minister, Satō decided not to run for a fourth. His heir apparent, Takeo Fukuda, won the Sato faction's support in the subsequent Diet elections, but the more popular MITI minister, Kakuei Tanaka, won the vote, ending the Satō faction's dominance.

Satō repeatedly refused to allow representatives from the People's Republic of China to visit Japan. In 1965, Satō approved a US$150 million loan to Taiwan. He visited Taiwan in 1967. In 1969, Satō insisted that the defense of Taiwan was necessary for the safety of Japan. Satō followed the United States in most major issues, but Satō opposed the Nixon visit to China. Satō also bitterly opposed the entry of the PRC into the United Nations in 1971. Satō introduced the Three Non-Nuclear Principles on December 11, 1967, which means non-production, non-possession, and non-introduction of nuclear weapons. He later suggested the "Four-Pillars Nuclear Policy". During the prime ministership of Satō, Japan entered the Nuclear Non-Proliferation Treaty. The Diet passed a resolution formally adopting the principles in 1971.

Since the end of the Second World War, Okinawa had been occupied by the United States. While visiting the United States in January 1965, Satō openly asked President Lyndon Johnson to return Okinawa to Japan. In August 1965, Satō became the first post-war prime minister of Japan to visit Okinawa. In 1969, Satō struck a deal with U.S. president Richard Nixon to repatriate Okinawa and remove its nuclear weaponry: this deal was controversial because it allowed the U.S. forces in Japan to maintain bases in Okinawa after repatriation. Okinawa was formally returned to Japan in 1971, and from that agreement Japan asserts a claim on the disputed Senkaku Islands as well.

During Satō's term, Japan participated in the creation of the Asian Development Bank in 1966 and held a ministerial level conference on Southeast Asian economic development. It was the first international conference sponsored by the Japanese government in the postwar period. In 1967, he was also the first Japanese prime minister to visit Singapore.

Satō shared the Nobel Peace Prize with Seán MacBride in 1974. He died in Tokyo the following year.
Satō married Hiroko, the daughter of diplomat Yosuke Matsuoka in 1926 and had two sons, Ryutarō and Shinji. His hobbies included golf, fishing, and the Japanese tea ceremony.