Johnson-Sirleaf is of mixed Gola and German heritage; her father was the first indigenous Liberian to sit in the national legislature. She was educated at the College of West Africa in Monrovia and at age 17 married James Sirleaf (they were later divorced). In 1961 Johnson-Sirleaf went to the United States to study economics and business administration. After obtaining a master's degree (1971) in public administration from Harvard University, she entered government service in Liberia.

Johnson-Sirleaf served as assistant minister of finance (1972–73) under President William Tolbert and as finance minister (1980–85) in Samuel K. Doe (Doe, Samuel K)'s military dictatorship. She became known for her personal financial integrity and clashed with both heads of state. During Doe's regime she was imprisoned twice and narrowly avoided execution. In the 1985 national election she campaigned for a seat in the Senate and openly criticized the military government, which led to her arrest and a 10-year prison sentence. She was released after a short time and allowed to leave the country. During 12 years of exile in Kenya and the United States, she became an influential economist for the World Bank, Citibank, and other international financial institutions. From 1992 to 1997 she was the director of the Regional Bureau for Africa of the United Nations Development Programme.

With more than 15,000 United Nations peacekeepers in the country and unemployment running at 80 percent, Johnson-Sirleaf faced serious challenges. She immediately sought debt amelioration and aid from the international community. In addition, she established a Truth and Reconciliation Committee to probe corruption and heal ethnic tensions.