Milstein was born to Jewish family in Manhattan and raised in the Bronx. In 1919, his Father Morris Milstein, an immigrant from Russia and who started out as a floor scraper, founded the Circle Floor Company, Inc., a wood flooring company, and later, the Mastic Tile Company, a vinyl flooring company.

Milstein launched the family's first real estate development projects in the 1950s in partnership with his brother Seymour. Through various family controlled entities, the Milstein family has built or bought multi-family residential properties with more than 50,000 apartments, 8,000 hotel rooms and 20,000,000 square feet (1,900,000 m) of office space. Their companies, Milstein Brothers (MB) Real Estate and Milford Management, manage the organization’s residential and commercial space. The family made its mark in Manhattan as Paul Milstein saw and seized the potential in numerous transitional neighborhoods. Paul and his sons, Howard and Edward, invested in large-scale building projects that catalyzed growth, development and revival.

Starting in the 1970s, the Milsteins provided capital to support medical research. In addition to the Milstein Hospital Building (1988), they funded the Milstein Institute for Surgical Science and the Milstein Laboratories (1992–1993) to conduct research in Alzheimer's Disease, diabetes and cancer. The Milstein family is also providing support to the National Cancer Institutes of the National Institutes of Health (NIH) and Rockefeller University, with the Milstein Medical Research Program.

In 1986, the Milsteins acquired the Emigrant Savings Bank, which they built into the largest privately owned bank in the country. In 2004, the Milsteins founded the New York Private Bank & Trust which targets high wealth families.

In 1989, the Milstein family acquired Douglas Elliman-Gibbons & Ives residential real estate brokerage. At the time of purchase Douglas Elliman had 10% of the New York City brokerage and managed 15,000 apartments. Howard Milstein served as Chairman for ten years and built the brand, which holds 40% of the brokerage market and managing 50,000 apartments.

Paul Milstein and his wife Irma established The Paul and Irma Milstein Foundation in 1994 to lead much of their philanthropic work. Milstein Family generosity has made a difference at many New York institutions including: the Milstein Hospital Building at NewYork–Presbyterian Hospital; the Milstein Hall of Ocean Life and the Milstein Hall of Large Mammals at The American Museum of Natural History; the Paul Milstein Pool and Terrace at Lincoln Center; and the Milstein Division of U.S. History, Local History, and Genealogy at the New York Public Library.

The Paul Milstein Center for Real Estate anchors Columbia Business School's top-ranking real estate MBA program. Established in 2001, the Milstein Center merges real estate education at Columbia Business School with a focus on capital markets, entrepreneurship and global Business. The Milstein family has a long-standing commitment to education and youth. Irma Milstein has provided major support to Bank Street College of Education, one of the premier Teacher training institutions in the U.S.

Paul and Irma Milstein have given to the Jewish Theological Seminary and JASA (Jewish Association for Services for the Aged). They sponsored the Milstein Family Jewish Communal Archive Project for the YIVO Institute at the Center for Jewish History and established the Milstein sanctuary at Temple Israel in Westchester County. The Milstein family have been generous donors at Hadassah Medical Center in Jerusalem, naming the Paul and Irma Milstein Heart Institute at the Sarah Wetsman Davidson Tower, which will be dedicated in 2011. In addition, the family have been generous supporters of United Jewish Appeal (UJA-Federation) and the American Jewish Committee (AJC).

Irma Milstein committed a major gift to Cornell University and the Cornell University College of Architecture, Art, and Planning for the construction of Paul Milstein Hall – the new home for the university’s undergraduate architecture program. Ground was broken in 2009 for the 47,000-square-foot (4,400 m) building designed by Rem Koolhaas and the Office for Metropolitan Architecture. Paul and Irma are parents and grandparents of several students and alumni at Cornell.