Fontane was born in Neuruppin into an Huguenot family. At the age of sixteen he was apprenticed to an apothecary, his father's profession. He became an apothecary himself, and in 1839, at the age of 20, wrote his first work (Heinrichs IV. erste Liebe, now lost). His further education was in Leipzig where he came into contact with the progressives of the Vormärz. Fontane's first published work, the novella Geschwisterliebe ("Sibling Love"), appeared in the Berlin Figaro in December 1839.

His biographer Gordon A. Craig observes that this work gave few indications of his promise as a gifted writer: "Although the theme of incest, which was to occupy Fontane on later occasions, is touched upon here, the mawkishness of the tale... is equaled by the lameness of its plot and the inertness of the style in which it is told, and [the characters] Clärchen and her brother are both so colorless that no one could have guessed that their creator had a future as a writer."

His first job as apothecary was in Dresden after which he returned to his father's shop in the provincial town of Letschin in the Oderbruch region. Fleeing its provincial atmosphere, Fontane published articles in the Leipzig newspaper Die Eisenbahn and translated Shakespeare. In 1843, he joined a literary club in Berlin called Tunnel über der Spree (Tunnel over the river Spree) where he came into contact with many of the most renowned German writers including Theodor Storm, Joseph von Eichendorff and Gottfried Keller.

In 1844 Fontane enlisted in the Prussian army and set out on the first of numerous journeys to England which fostered his interest in Old English ballads, a form he began to imitate. He became engaged to his future wife, Emilie Rouanet - Kummer, whom he had met when still at school.

He briefly participated in the revolutionary events of 1848. In 1849 he quit his job as an apothecary and became a full time journalist and writer. In order to support his family he took a job as a writer for the Prussian intelligence agency Zentralstelle für Presseangelegenheiten which was meant to influence the press towards the German nationalist cause.

He specialised in British affairs, and the agency made him for several years its correspondent in London where he was later joined by his wife and two sons. While still in London he quit his government job and, on his return to Berlin, became editor of the conservative Kreuzzeitung.

Fontane's books about Britain include Ein Sommer in London (1854), Aus England, Studien und Briefe (1860) and Jenseits des Tweed, Bilder und Briefe aus Schottland (1860). The success of the historical novels of Walter Scott had helped to make British themes much en vogue on the continent. Fontane's Gedichte (1851) and ballads Männer und Helden (1860) tell of Britain's former glories.

Back in Germany, Fontane became particularly interested in his home province, the March of Brandenburg. He enjoyed rambling through its rural landscapes and small towns and delighted in the growth of its capital city, Berlin. His fascination with the countryside surrounding Berlin may be seen in his delightfully picturesque Wanderungen durch die Mark Brandenburg (1862 - 1882, 5 vols.) in which he successfully transposed his former fascination with British historical matters to his native soil.

In 1870, he quit his job at the Kreuzzeitung and became drama critic for the liberal Vossische Zeitung, a position he held until retirement. He had already written about Prussia's war against Denmark in Der schleswig - holsteinische Krieg im Jahre 1864 (1866) and the Austro - Prussian War in Der deutsche Krieg von 1866 (1869). He went to the front to observe the Franco - Prussian War in 1870, and, after being taken prisoner at Vaucouleurs, remained in French captivity for three months. He set down his experiences in Kriegsgefangen Erlebtes 1870 (1871) and published his observations on the campaign in Der Krieg gegen Frankreich 1870 - 71 (1874 - 1876).

At the age of 57 Fontane finally worked in the genre for which he is remembered, the novel. His fine historical romance Vor dem Sturm (1878) was followed by a series of novels of modern life, notably L'Adultera (1882), a book about adultery which was considered so risqué that it took Fontane two years to find a publisher.

In his novels Frau Jenny Treibel, Irrungen, Wirrungen, and Effi Briest (1894), he found his very own tone, yielding insights into the lives of the nobility as well as the "common man". His achievement there was later described as poetic realism. In Der Stechlin (1899), his last completed novel, Fontane adapted the realistic methods and social criticism of contemporary French fiction to the conditions of Prussian life.