Wood grew up in Philadelphia and New York City, acquiring considerable wealth as a merchant and real estate investor. He entered politics as a Democrat in 1834 and shortly thereafter emerged a leader of Tammany Hall. He served one term in Congress (1841–43), and he was defeated in his first run for mayor of New York City in 1850.

He triumphed in the 1854 mayoral election, however, and he was reelected in 1856 and 1859. Although upstate Republicans accused Wood of graft and Tammany Hall charged him with failing to award patronage to his own party, Wood did succeed in creating Central Park and making important reforms. When he lost the backing of Tammany Hall, Wood formed his own powerful political organization, Mozart Hall.

In 1860 Wood led a pro-Southern delegation to the Democratic National Convention, and as civil war loomed early in 1861, he called for New York City to secede and become a free city. Although he briefly supported President Abraham Lincoln and the Northern war effort, by 1863 he was organizing the peace Democrats (called “Copperheads” by Republicans) and demanding that the North negotiate an immediate end to the war.

Elected to Congress in 1862 and again from 1866 to 1880, Wood opposed Republican Reconstruction policies but generally supported Republican fiscal measures. His independence alienated fellow Democrats, and they refused to elect him speaker of the House in 1875. But in 1877 Wood was elected majority floor leader and made chairman of the Ways and Means Committee. He served in the House of Representatives until his death.