The son of James Maitland Balfour and a nephew of Robert Cecil, 3rd marquess of Salisbury, Balfour was a member of a highly intellectual, wealthy, and aristocratic circle. He was educated at Eton and at Trinity College, Cambridge, and, upon leaving Cambridge, he entered Parliament as a Conservative member for Hertford. In 1879 he published his Defence of Philosophic Doubt in which he endeavoured to show that scientific knowledge depends just as much as theology upon an act of faith. In the great Victorian struggle between science and religion, Balfour was on the side of religion. He continued to take a keen interest in scientific and philosophical problems throughout his life.

Balfour was president of the Local Government Board in his uncle's first government (1885–86). In the second Salisbury ministry (1886–92), he was secretary for Scotland and then chief secretary for Ireland, with a seat in the Cabinet. An implacable opponent of Irish Home Rule, he earned the name “Bloody Balfour” because of his severity in suppressing insurrection. At the same time he opposed the evils of English absentee landlordism in Ireland and made various concessions for the purpose of “killing home rule by kindness.”

Known as a formidable parliamentary debater, Balfour became (1891) leader of the House of Commons and first lord of the treasury, thus being second in command to Lord Salisbury. During W.E. Gladstone's last Liberal ministry (1892–94), he led the opposition in the House of Commons. In the last of Salisbury's three governments (1895–1902), Balfour became more powerful as his uncle's health declined. Although he disapproved of the policies that resulted in the South African (Boer) War (1899–1902), he insisted that the British win the war decisively.

After Salisbury's retirement, Balfour served as prime minister from July 12, 1902, to Dec. 4, 1905. He sponsored and secured passage of the Education Act (Balfour Act; 1902), which reorganized the local administration of elementary and secondary schools. The Wyndham Land Purchase Act (1903) encouraged the sale of land to tenant farmers in Ireland. The Committee of Imperial Defense (created 1904) made possible a realistic worldwide British strategy. None of these measures was especially popular with the voters. Balfour also decided to meet a shortage of miners in South Africa by importing large numbers of indentured Chinese, a decision that was condemned by humanitarians and by British organized labour. After a Cabinet crisis in 1903, Balfour regained prestige in the completion of negotiations for the Anglo-French agreement (Entente Cordiale; (Entente Cordiale) 1904), a major change in British foreign policy, by which the supremacy of Great Britain in Egypt and of France in Morocco was recognized. Increasing Conservative disunity over the question of abandoning free trade finally caused him to resign, although he remained the official party leader until November 1911.

On May 25, 1915, when H.H. Asquith formed a wartime coalition ministry, Balfour succeeded Winston Churchill as first lord of the Admiralty. In the political crisis of December 1916, he ceased to support Asquith and turned to David Lloyd George, in whose new coalition he became foreign secretary. In that office he had little to do with the conduct of World War I or with the peace negotiations.

His most important action occurred on Nov. 2, 1917, when, prompted by the Zionist leaders Chaim Weizmann (Weizmann, Chaim) and Nahum Sokolow (Sokolow, Nahum), he wrote a letter to Baron Rothschild, head of the English branch of the Jewish banking family, that contained the so-called Balfour Declaration. This declaration, pledging British aid for Zionist (Zionism) efforts to establish a home for world Jewry in Palestine, gave great impetus to the establishment of the state of Israel.

After the war Balfour served twice (1919–22, 1925–29) in the Cabinet post of lord president of the council. He was largely responsible for the negotiations that led to the definition of relations between Great Britain and the dominions—the Balfour Report (1926)—which was to be expressed in the Statute of Westminster in 1931. In 1922 he was created an earl. His Chapters of Autobiography (1930) was edited by his niece, Blanche E.C. Dugdale.