After studying law, Gerstenberg entered the Danish military service and took part in the war with Russia in 1762. He left the service and spent the next 12 years in Copenhagen, where he became a friend of Friedrich Gottlieb Klopstock (Klopstock, Friedrich Gottlieb), the leading writer of the German Enlightenment. During that time he wrote Gedicht eines Skalden (1766; “Poems of an Old Norse Bard”), in which he introduced bardic poetry into German literature with the use of material and themes from Norse antiquity. His powerful and gruesome tragedy Ugolino (1768) ranges in its expression from the heroic to the macabre. During his Copenhagen years he also wrote the text of a cantata, Ariadne auf Naxos (1767), that was set to music by Johann Adolph Scheibe and Johann Christian Bach (Bach, Johann Christian) and later adapted for a well-known duodrama by Jiří Antonín Benda (Benda, Georg).

Gerstenberg also was a musician; he had been a pupil of Scheibe. Gerstenberg formulated theories of instrumental and dramatic music that opposed those of Jean-Jacques Rousseau. From 1775 to 1783 he was the official Danish representative at Lübeck, and in 1789 he received a judicial appointment at Altona.