He was the son of a merchant of Scottish descent living in Sweden. At age 16, after education in England, Chambers entered the service of the Swedish East India Company. A voyage to Canton supplied the materials for his Designs of Chinese Buildings (1757). In 1749 he studied architecture, first in Paris with the influential architectural theorist Jacques-François Blondel (Blondel, Jacques-François) and then in Rome. Returning to England in 1755, he became architectural tutor to the prince of Wales, the future George III. This appointment led to an extremely successful career as an official architect. He helped found the Royal Academy of Arts in 1768 and was its first treasurer in 1768. Upon receiving the knighthood of the Polar Star from the king of Sweden, he was allowed by George III to assume the rank and title of an English knight.

His best-known works are Somerset House (1776–86) in London, now home of the Courtauld Institute Galleries; the casino at Marino (c. 1776), near Dublin; Duddingston House (1762–64) in Edinburgh; and the ornamental buildings, including the Pagoda (1757–62), at Kew Gardens, Surrey (now in London). In the last he went as far in the direction of Romantic eclecticism as any architect of his time. In general, however, he was an architectural conservative who used a profound knowledge of European (especially French) architecture to give a new look to the accepted motifs of Palladianism. His books, notably A Treatise on Civil Architecture (1759), had widespread influence.