Forster, born of Quaker parents, was a nephew of the philanthropist Sir Thomas Fowell Buxton and brother-in-law of the poet and scholar Matthew Arnold. A Liberal member of the House of Commons from 1861 until his death, he began in 1866 to demand universal education as an essential complement of parliamentary reform. In 1868 he was charged with preparing an elementary education bill, which was passed on Aug. 9, 1870, after a prolonged wrangle between Anglicans and Nonconformists over its religious clauses. This bill established the rudiments of a system of national education in Great Britain.

When William Gladstone temporarily retired in January 1875, Forster was strongly supported for Liberal Party leadership in the House of Commons, but he yielded to the Marquess of Hartington (afterward 8th Duke of Devonshire). On Gladstone's return to the office of prime minister in 1880, Forster was made chief secretary for Ireland. As a radical he approved of extensive land-tenure reform in Ireland, but, faced with the violence of the Irish agricultural revolution, he called for parliamentary measures of coercion to maintain law and order—a policy that completely failed. He was exhausted by his frequent travels between Dublin and London; and in Ireland, from the autumn of 1881, his life was in constant danger. In March 1882, nevertheless, he visited some of the most turbulent districts to address angry tenant farmers. On May 2, 1882, when the British government agreed to release Charles Stewart Parnell and other Irish nationalist leaders from Kilmainham jail, Forster seized the occasion to resign.

Four days later his successor, Lord Frederick Cavendish, was murdered by Irish terrorists in Phoenix Park, Dublin. Forster's offer to return as temporary chief secretary was declined. Later, he made several intemperate speeches on Irish personalities and issues, and he died an avowed opponent of Gladstone's policy of Home Rule for Ireland.