Tretyakov was taught at home. In the first half of 1850 he inherited his father's business and built up a profitable trade in flax, linen processing and the sale of textiles. Together with other Moscow businessmen he acted as the founder of the Moscow merchant bank (becoming one of its heads), the Moscow commercial and industrial company, and some other large firms. He amassed a considerable fortune (4.4 million rubles), consisting of real estate (5 houses in Moscow), securities, money and bills.

Tretyakov started to collect art in 1854 at the age of 24; his first purchase was 10 canvases by Old Dutch masters. He laid down for himself the aim of creating a Russian National Gallery. In his collection Tretyakov included the most valuable and remarkable products, first of all the contemporaries, from 1870 - mainly members of the society of circulating art exhibitions (Tovarishchestvo peredvizhnyh hudozhestvennyh vystavok or Peredvizhniki, Передвижники in Russian). He bought paintings at exhibitions and directly from artists' studios, sometimes he bought the whole series: in 1874 he acquired V.V. Vereschagin's "Turkestan series" (13 pictures, 133 figures and 81 studies), in 1880 his "Indian series" (78 studies). In his collection there were over 80 studies by Alexander Ivanov. In 1885 Tretyakov bought 102 studies by V.D. Polenov painted by the artist during journeys across Turkey, Egypt, Syria and Palestine. He also acquired Vasnetsov’s collection of the sketches made during his work in the Kiev St. Volodymyr's Cathedral. Tretyakov had the fullest collection of such artists as: V.G. Perov, I.N. Kramskoi, Ilya Repin, Vasily Surikov, I.I. Levitan, and Valentin Serov. Aspiring to show the beginnings and development of the domestic school of art , Tretyakov began to acquire pictures by masters of the XVIII - first half XIX centuries and landmarks of Old Russian painting. He also conceived the creation of a "Russian pantheon" - a portrait gallery of famous Russians. He commissioned especially for it portraits of figures of domestic culture from leading masters of this genre - N.N. Ge, Kramskoi, N.V. Nevrev, Perov, Repin.

In 1870-80 Tretyakov also began to collect illustrations (471 by 1893), since 1890 he formed a collection of icons. During his lifetime they were not included in an exhibition, being kept in the owner's study. He also collected sculpture, however this part of his collection was small (9 sculptures by 1893).

At first his gallery was located in Tretyakov’s house in Lavrushenski pereulok. But as his collection expanded he decided to reconstruct his house. In 1870 - 1880 the house was repeatedly reconstructed by the architect Kaminski. Tretyakov wanted to transfer the gallery to the city as discreetly as possible, without any noise; he didn’t want to be in the center of general attention and an object of gratitude. But it was not possible to do it and he was very dissatisfied.

From 1881 his gallery became popular (by 1885 it was visited by about 30 thousand people). In 1892 Tretyakov inherited a collection of Western European paintings from his brother and placed it in two halls of the western school. The collection in Tretyakov’s gallery was equal in importance with the largest museums in Russia at that time, and became one of the most important collections of Moscow. In August 1892 Tretyakov donated his collection and a private residence to Moscow. By then in the collection there were 1287 picturesque and 518 graphic products of the Russian school, 75 pictures and 8 figures of the West European school, 15 sculptures and a collection of icons.

On August, 15 1893 the official opening of a museum under the name "Pavel and Sergey Tretyakov City art gallery" (nowadays Tretyakov Gallery) took place. By 1890 it was visited by up to 150 thousand people annually. Tretyakov continued to fill up his collection, for example, in 1894 he donated  30 pictures, 12 figures and a marble statue “The Christian martyrs“ by M.M. Antokolski. He was engaged in studying the collection, and from 1893 issued its catalogue.

Apart from engaging in collecting, Tretyakov was active in charity. Charity for him was as natural as the creation of a national gallery.

Tretyakov was an honorary member of the Society of fans of applied arts and the Musical society from the date of their foundation, and granted them solid sums, supporting all educational undertakings. He took part in a set of charitable events, to help the families of the victims during the Crimean and Russo-Turkish Wars. Tretyakov's grants were established in commercial schools - by Moscow and Alexandrovskoe. He never refused monetary help to artists and other applicants, and carefully cared of the monetary business of painters who without fear entrusted him with their savings. Pavel Mikhailovich repeatedly lent money to I.N. Kramskoi, V.G. Khudyakov, K.A. Trutovski, M.K. Klodt and many others.

The brothers - Pavel and Sergey Tretyakov - founded in Moscow the Arnoldo - Tretyakov School for deaf-mutes. In his will Tretyakov provided large sums for the school of deaf-mutes. For the pupils of the school Tretyakov bought a big stone house with a garden. 150 boys and girls lived in this house. Tretyakov selected the best teachers, and got acquainted with the methods of studying.

Pavel Tretyakov bequeathed half of his estate to charitable purposes: a shelter for widows, juvenile children and unmarried daughters of dead artists, and also the financing of his gallery.

He died in 1898. He was buried in the Danilov Cemetery, but in 1948 his remains were transferred to Novodevichy Cemetery.

A minor planet 3925 Tret'yakov, discovered by Soviet astronomer Lyudmila Zhuravlyova in 1977, is named after Pavel Tretyakov and his brother Sergei Mikhailovich Tretyakov (1824 - 1892).