Born in Irvine, North Ayrshire, Scotland, Galt was the son of a naval captain. When his family relocated to Malden in 1789, Galt became an apprentice and junior clerk, writing essays and stories for local journals in his spare time. He moved to London in 1804 to seek his fortune and in 1809 began studying law at Lincoln's Inn.

While subsequently traveling in Europe, Galt met and befriended Lord Byron. On his return to London, Galt wrote an account of his travels, which met with moderate success. Decades later, he would also publish the first full biography of Lord Byron. He also published the first biography of the painter Benjamin West, The Life and Studies of Benjamin West (1816, expanded 1820).

In 1813, Galt attempted to establish a Gibraltarian trading company, in order to circumvent Napoleon's embargo on British trade; however, Wellington's victory in Spain made this no longer necessary. Galt then returned to London and married Elizabeth Tilloch. In 1815, he became Secretary of the Royal Caledonian Asylum in London. He also privately consulted in several business ventures.

Concentrating on his writing for the next several years, Galt lived at times in London, Glasgow, Edinburgh and elsewhere, writing fiction and a number of school texts under the pseudonym Reverend T. Clark. In addition to moving his residence frequently during this period, Galt also switched publishers several times, moving from Blackwood's Magazine to Oliver and Boyd and then back again.

In 1824, Galt was appointed Secretary to the Canada Company, a charter company established to aid in the colonization of Upper Canada. While in Canada, Galt lived in Ontario, where he founded the city of Guelph in 1827. The community of Galt in Ontario was named after him. His three sons played prominent roles in Canadian politics; one of them, Alexander, was one of the 'Fathers of the Confederation', and Canada's first Minister of Finance.

During his tenure with the Canada Company, Galt ran afoul of several colonial authorities, including Sir Peregrine Maitland,who was Lieutenant-Governor of Upper Canada at the time. He was heavily criticised by his employers for his lack of basic accounting skills and failure to carry out their established policies. This resulted in his dismissal and recall to Great Britain in 1829.

Soon after his return to England he was imprisoned for several months for failure to pay his debts. One of Galt's last novels, The Member, has political corruption as its central theme.

Despite failing health, Galt was involved in another colonial business venture, the British American Land Company,which was formed to develop lands in the Eastern Townships of Lower Canada. Galt served as secretary but was forced to resign in December 1832 because of his health.

He retired to Greenock in Scotland, publishing his two volume Autobiography in 1833.

John Galt is commemorated in Makars' Court, outside The Writers' Museum, Lawnmarket, Edinburgh and by the John Galt memorial fountain in Greenock. In 2006, the community of Guelph proclaimed the first Monday in August, "John Galt Day."

The town of Galt, Ontario was named after John Galt, but has now been absorbed into Cambridge, Ontario.

Galt's novels are best known for their depiction of Scottish rural life, tinged with ironic humour. Galt wrote the following works:

• Cursory Reflections on Political and Commercial Topics (1812)
• The Life and Administration of Cardinal Wolsey (1812)
• The Tragedies of Maddelen, Agamemnon, Lady Macbeth, Antonia and Clytemnestra (1812)
• Voyages and Travels (1812)
• Letters from the Levant (1813)
• The Life and Studies of Benjamin West (1816)
• The Majolo (2 volumes) (1816)
• The Appeal (1818)
• The Wandering Jew (1820)
• The Earthquake (3 volumes) (1820)
• Glenfell (1820)
• The Life, Studies and Works of Benjamin West (1820)
• Annals of the Parish (1821)
• The Ayrshire Legatees (1821)
• Sir Andrew Wylie (3 volumes) (1822)
• The Provost (1822)
• The Steam-Boat (1822)
• The Entail (3 volumes) (1823)
• The Gathering of the West (1823)
• Ringan Gilhaize (3 volumes) (1823)
• The Spaewife (3 volumes) (1823)
• The Bachelor's Wife (1824)
• Rothelan (3 volumes) (1824)
• The Omen (1825)
• The Last of the Lairds (1826)
• Lawrie Todd (1830)
• The Life of Lord Byron (1830)
• Southennan (3 volumes) (1830)
• Bogle Corbet or The Emigrants (3 volumes) (1831)
• The Lives of the Players (1831)
• The Member (1832)
• The Radical (1832)
• Stanley Buxton (3 volumes) (1832)
• Autobiography (2 volumes) (1833)
• Eben Erskine or The Traveller (3 volumes) (1833)
• The Ouranoulagos or The Celestial Volume (1833)
• Poems (1833)
• The Stolen Child (1833)
• Stories of the Study (3 volumes) (1833)
• Literary Life and Miscellanies (3 volumes) (1834)
• A Contribution to the Greenock Calamity Fund (1834)
• Efforts by an Invalid (1835)
• The Demon of Destiny and Other Poems (1839)