The son of Count Antonio Capo d'Istria, he was born in Corfu (at that time under Venetian rule), studied at Padua, and then entered government service. In 1799 Russia and Turkey drove the French from the Ionian Islands and organized them into the Septinsular Republic. Kapodístrias participated in writing the new state's second constitution (adopted 1803) and became its secretary of state (1803). France regained control of the islands (1807), however, and Kapodístrias entered the Russian foreign service (1809). He became an expert on Balkan affairs, which earned him a post with the commander of Russia's armed forces on the lower Danube River (1812). After the army marched north to oppose Napoleon's invasion of Russia (1812), Kapodístrias was assigned as a diplomat to the army staff (1813) and later was sent by Alexander I on a special mission to Switzerland (1814).

After attending the postwar Congress of Vienna as one of Russia's representatives (1814–15), Kapodístrias became a highly influential adviser of the emperor; and, after January 1816, he was given equal responsibility with Karl Robert Nesselrode, the director of the Ministry of Foreign Affairs, for the conduct of Russia's foreign policy.

Kapodístrias, however, expressed doubts about Alexander's Holy Alliance with Austria and Prussia and objected to Russia's approval of Austria's suppression of the revolts in Naples and Piedmont (1820–21). Consequently, he earned the political enmity of Austria's chancellor Metternich, who used his increasing influence over Alexander to undermine Kapodístrias' position. When Alexander refused to support the Greek revolt against Turkey (begun March 1821), Kapodístrias, who had a deep sympathy for the cause of Greek independence (Greek Independence, War of), although he had earlier refused to lead the major Greek revolutionary organization, found himself in an intolerable position. In 1822, therefore, he took an extended leave of absence from the Russian service and settled in Geneva, where he devoted himself to supplying material and moral relief to the Greek rebels until April 1827, when he was elected provisional president of Greece.

Resigning from the Russian service, he then toured Europe seeking financial and diplomatic support for the War of Greek Independence and arrived at Návplion (Nauplia), Greece's capital, in January 1828. He subsequently directed his energies toward negotiating with Great Britain, France, and Russia (which had all joined the war against the Turks) over the settlement of Greece's frontiers and the selection of its new monarch. He became leader of a party with pro-Russian sympathies. He also worked to organize an effective government apparatus and to subordinate powerful, semiautonomous local leaders to the authority of the new state. In the process, however, he acquired many enemies, two of whom, Konstantinos and Georgios Mavromikhalis of Maina, assassinated Kapodístrias as he entered a church.