Austen Chamberlain was born in Birmingham, the second child and eldest son of Joseph Chamberlain, then a rising industrialist and political radical, later Mayor of Birmingham and a dominant figure in Liberal and Unionist politics at the end of the 19th century. His mother, the former Harriet Kenrick, died in childbirth, leaving his father so shaken that for almost 25 years he maintained a distance from his first-born son. In 1868, his father married Harriet's cousin, Florence, and had further children, the oldest of whom, Arthur Neville, would become Prime Minister in the year of Austen's death.

In the last years before the outbreak of World War I, Chamberlain was concerned with one issue above all others: Home Rule for Ireland. The issue that had prompted his father to leave the Liberal Party in the 1880s now threatened to spill over into outright civil war, with the government of H. H. Asquith committed to the passage of a Third Home Rule Bill. Chamberlain was resolutely opposed to the dissolution of the Union with Ireland. To the strain then was added the death of his father in July 1914, only a few days after the assassination of Archduke Franz Ferdinand of Austria, which began the train of events that led to the war.

Austen returned to England in 1888, lured largely by the prize of a parliamentary constituency. He was first elected to parliament as a member of his father's own Liberal Unionist Party in 1892, sitting for the seat of East Worcestershire. Owing to the prominence of his father and the alliance between the anti-Home Rule Liberal Unionists and Conservatives, Chamberlain was returned unopposed on 30 March, and at the first sitting of the new session, he walked up the floor of the house flanked by his father and his uncle, Richard.

His estate was valued at probate at £45,044, a relatively modest sum for such a famous public figure. Much of his father's fortune had been lost in an attempt to grow sisal in the West Indies in the early 1890s, and unlike Neville, he never went into Business to make money for himself.

Owing to the dissolution of parliament and the 1892 general election that August, Chamberlain was unable to make his maiden speech until April 1893, but, when delivered, it was acclaimed by the four-time Prime Minister william Ewart Gladstone as "one of the best speeches which has been made". That Chamberlain was speaking against Gladstone's own Second Home Rule Bill does not seem to have dampened the enthusiasm of the Prime Minister, who responded by publicly congratulating both Austen and his father, Joseph, on such an excellent performance. That was highly significant, given the bad blood existing between Joseph Chamberlain and his former leader.

Appointed a junior Whip of the Liberal Unionists after the general election, Austen's main role was to act as his father's "standard bearer" in matters of policy. Following the Conservative and Unionist landslide win in the election of 1895, Chamberlain was appointed Civil Lord of the Admiralty, holding that post until 1900, when he became Financial Secretary to the Treasury. Lord Salisbury retired as Prime Minister in July 1902, and the following month Chamberlain was promoted to the position of Postmaster General by the new premier, the Conservative Arthur J. Balfour, who also designated this a cabinet position, and appointed him to the Privy Council.

In the wake of the struggle between his father and Balfour, Austen Chamberlain became Chancellor of the Exchequer in 1903. Austen's appointment was largely a compromise solution to the bitter division of the two Unionist heavyweights, which threatened to split the coalition between supporters of Chamberlain's Imperial Tariff campaign and Balfour's more cautious advocacy of protectionism. While Austen supported his father’s programme, his influence within the cabinet was diminished following the departure of the senior Chamberlain to become backbenchers. Facing a resurgent Liberal opposition and the threat of an internal party split, Balfour eventually took the Unionists into opposition in December 1905, and in the ensuing rout in the election of 1906, Austen found himself one of the few surviving Liberal Unionists in the House of Commons.

Austen was educated first at Rugby School, before passing on to Trinity College, Cambridge. While at Trinity College, he became a lifelong friend of F. S. Oliver, a Future advocate of Imperial Federation and, after 1909, a prominent member of the Round Table movement. Chamberlain made his first political address in 1884 at a meeting of the university's Political Society and was vice-president of the Cambridge Union Society.

With the Unionists in disarray after electoral defeats at both the January and December 1910 elections, Balfour was forced from his position as party leader in November 1911. Chamberlain was one of the leading candidates to succeed as Conservative leader even though he was still technically a member of the Liberal Unionist wing of the coalition (the two parties merged formally only in 1912).

He stood for the Liberal Unionist Party, which merged with the Conservatives in 1912, and led the Conservatives in the Commons in 1921–22. As Foreign Secretary, he negotiated the Locarno Pact (1925), aimed at preventing war between France and Germany, for which he was awarded the Nobel Peace Prize. He was one of the few MPs supporting Winston Churchill's appeals for rearmament against the German threat in the 1930s.

Pressure from the Conservative opposition, in part led by Chamberlain, eventually resulted in the formation of the wartime coalition government, in 1915. Chamberlain joined the cabinet as Secretary of State for India. Like other politicians, including Arthur Balfour and George Curzon, Chamberlain supported the invasion of Mesopotamia to increase British prestige in the region, thus discouraging a German-inspired Muslim revolt in India.

Chamberlain remained at the India Office after David Lloyd George succeeded Asquith as Prime Minister in late 1916, but following inquiries into the failure of the Mesopotamian campaign (undertaken by the separately-administered Indian Army) in 1915, including the loss of the British garrison during the Siege of Kut, Chamberlain resigned his post in 1917; as the minister ultimately responsible, the fault lay with him. He was widely acclaimed for such a principled act.

After Lloyd George's Paris speech (12 November 1917) at which he said that "when he saw the appalling casualty lists he wish(ed) it had not been necessary to win so many ("victories")" there was talk of Chamberlain withdrawing support from the government. Lloyd George survived by claiming that the aim of the new inter-Allied Supreme War Council was purely to "coordinate" policy, not to overrule the British generals, who still enjoyed a good deal of support from Conservatives.

Following the victory of the Lloyd George coalition in the 1918 general election, Chamberlain was again appointed to the position of Chancellor of the Exchequer in January 1919 and immediately faced the huge task of restoring Britain's finances after four years of wartime expenditure.

It was an unfortunate change of allegiance for Chamberlain, for by late 1921, the Conservative backbenchers were growing more and more restless for an end to the coalition and a return to single-party (Conservative) government. Conservatives in the House of Lords began, in public, to oppose the coalition, disregarding calls for support from Chamberlain. In the country at large, Conservative candidates began to oppose the coalition at by-elections, and discontent spread to the House of Commons.

In the autumn of 1922, Chamberlain faced a backbench revolt, largely led by Stanley Baldwin, designed to oust Lloyd George, and when he summoned the Carlton Club meeting 19 October 1922, of Conservative MPs, a motion was there passed for fighting the forthcoming election as an independent party. Chamberlain resigned the party leadership rather than act against what he believed to be his duty. He was succeeded by Bonar Law, whose views and intentions he had predicted the evening before the vote at a private meeting. Bonar Law formed a government shortly thereafter, but Chamberlain was not given a post, but it seems that he would not have accepted a position even if he had been offered one.

After the second resignation of Bonar Law in May 1923 (Law died from throat cancer later that year), Chamberlain was passed over again for the leadership of the party in favour of Stanley Baldwin. Baldwin offered Chamberlain the post of Lord Privy Seal, but Chamberlain insisted other former ministers from the Coalition to be included as well; Baldwin refused. However, Chamberlain returned to government when Baldwin formed his second ministry following success in the election of October 1924, serving in the important office of Secretary of State for Foreign Affairs from 1924 to 1929. Chamberlain was largely allowed a free hand by the easy-going Baldwin.

It is as Foreign Secretary that Chamberlain's place in history was finally assured. In a difficult period in international relations, Chamberlain faced not only a split in the entente cordiale by the French invasion of the Ruhr but also the controversy over the 1924 Geneva Protocol, which threatened to dilute British sovereignty over the issue of League of Nations economic sanctions.

Together with Aristide Briand of France, Chamberlain and Stresemann met at the town of Locarno in October 1925 and signed a mutual agreement (together with representatives from Belgium and Italy) to settle all differences between the nations by arbitration, not war. For his services, Chamberlain was not only awarded the Nobel Peace Prize but also made a Knight of the Order of the Garter. He was the first ordinary Knight of the Garter since Elizabethan times (Sir Henry Lee) to die without having been made a peer. He was the 871st Knight of the Garter.

While attending the University of Berlin, Austen developed a suspicion of the growing nationalism in Germany based upon his experience of the lecturing style of Heinrich von Treitschke, who opened up to him "a new side of the German character - a narrow-minded, proud, intolerant Prussian chauvinism", the consequences of which he was later to ponder during the First World War and the crises of the 1930s.

From 1934 to 1937, Chamberlain was, with Winston Churchill, Roger Keyes and Leo Amery, the most prominent voice calling for British rearmament in the face of a growing threat from Nazi Germany. In addition to speaking eloquently in Parliament on the matter, he was the chairman of two Conservative parliamentary delegations in late 1936 that met with Prime Minister Stanley Baldwin to remonstrate with him about his government's delay in rearming the British defence forces. More respected than Churchill, Chamberlain became something of an icon to young Conservatives, as the last survivor of the Victorian high politics.

Chamberlain was again briefly considered in 1935 for the post of Foreign Secretary but was passed over once the crisis was over for being too old for the job. Instead, his advice was sought as to the suitability of his former Parliamentary Private Secretary, now Minister for the League of Nations, Anthony Eden for the post.

Chamberlain died at the age of 73 in his London home, 24 Egerton Terrace, on 16 March 1937. He is buried in East Finchley Cemetery in London.

Austen and Neville Chamberlain and Iain Duncan Smith are the only three Conservative Leaders not to lead the party into a general election. Until william Hague (1997-2001), Austen was the only Conservative leader in the 20th century not to become Prime Minister.

Following his less-satisfactory engagement in issues in the Far East and Egypt, and the resignation of Baldwin’s government after the election of 1929, Chamberlain resigned his position as Foreign Secretary and went into retirement. He briefly returned to government in 1931 as First Lord of the Admiralty in Ramsay MacDonald's first National Government, but soon retired later that year after having been forced to deal with the unfortunate Invergordon Mutiny.