He was born in New York City, graduated at Yale in 1820, spent a year in legal study in Philadelphia, and two years of the study of theology at Princeton. For some time, he was a tutor at Yale, then went abroad to study Greek in Leipzig, Bonn, and Berlin. From 1831 to 1846 he was professor of Greek at Yale. After being chosen as president of Yale, he instructed students of history, political economy, political science, and especially international law.He resigned as president of Yale in 1871.

During his 25 years as president, Yale advanced in wealth and influence and two new departments, the Scientific School and the School of Fine Arts, were begun. Woolsey was one of the founders of the New Englander, chairman of the American commission for the revision of the Authorized Version of the Bible, president of the World's Evangelical Alliance at its international meeting in New York, a lifelong member and at one time president of the American Oriental Society, and a regent of the Smithsonian Institution. Among his writings and publications are these: Editions of the Alcestis of Euripides (1834), of the Antigone of Sophocles (1835), of the Prometheus of Æschylus (1837), of the Electra of Sophocles (1837), and of the Gorgias of Plato (1843); an edition of Lieber's Civil liberty and Self Government, and:

• Introduction to the study of International Law (1860, many times republished)
• Essays on Divorce and Divorce Legislation (1869)
• Religion of the Present and Future, a collections of sermons (1871)
• Political Science (1877)
• Communism and Socialism (1880)
• Helpful Thoughts for Young Men (1882)

Woolsey Hall at Yale is named in his memory. Woolsey Street in New Haven, Connecticut is also named in his honor. Theodore Dwight Woolsey's daughter Elizabeth Dwight Woolsey married as his second wife Daniel Coit Gilman, the Yale-educated first president of Johns Hopkins University.

The statue erected in his memory has a golden toe from being rubbed for good luck.