Born in Brookline, Massachusetts, he worked as a schoolteacher and shopkeeper for several years in Groton, Massachusetts before he studied law and then entered politics. He served in the Massachusetts State Legislature from 1842 until 1850, and then was a two-term Governor of Massachusetts. He was appointed Commissioner of Internal Revenue in 1862, and served in the U.S. House from 1863 until 1869. He was a member and Secretary of the Massachusetts Board of Education for eleven years, and member of the Board of Overseers at Harvard College for ten years. While in Congress, he served as one of the House prosecutors chosen to present the case against the President during the Senate impeachment trial of Andrew Johnson.

He served as Treasury Secretary from March 12, 1869 until March 16, 1873. His primary achievements were reorganizing the Treasury Department, improving bookkeeping by customs houses, incorporating the United States Mint into Treasury and reducing the national debt. He also managed the Black Friday crisis of September 23, 1869, warding off gold speculators by flooding the market with Treasury gold. When Grant won a second term, Boutwell took the opportunity to resign and run for the U.S. Senate from his home state of Massachusetts. He served in that body from 1873 until 1877.

Under an appointment by President Rutherford B. Hayes, he prepared the second edition of the United States Revised Statutes (1878).

He opposed the acquisition by the United States of the Philippines, became president of the American Anti-Imperialist League, and was a presidential elector on the William Jennings Bryan (Democratic) ticket in 1900.

He published several books on education, taxation and political economy. His book The Constitution of the United States at the End of the First Century was considered particularly significant.

Boutwell died in Groton, Massachusetts and is buried at Groton Cemetery. His house in the center of Groton is now headquarters of the Groton Historical Society.