Son of a veteran of the peasant army of César Augusto Sandino (Sandino, César Augusto), Ortega moved with his family to Managua in the mid-1950s. He briefly attended the Central American University in Managua, then in 1963 he went underground and became a member of the Sandinista National Liberation Front (FSLN). By 1967 he was in charge of the FSLN's urban resistance campaign against the ruling Somoza family.

In the fall of 1967 Ortega was arrested for his part in a bank robbery and spent the next seven years in jail. He and a number of other Sandinista prisoners were released at the end of 1974 in exchange for high-level Somocista hostages. Ortega, with the other released prisoners, was exiled to Cuba, where he received several months of guerrilla training. After secretly returning to Nicaragua, Ortega played a major role in the conciliation of various FSLN factions and in the formation of alliances with business and political groups. This policy gradually turned the guerrilla campaign into a full-fledged civil war and led to the Sandinista victory in 1979.

One of the five members of the Sandinista junta, Ortega was named coordinator of the junta in 1981 and three years later was elected president of Nicaragua. He was defeated in his bid for reelection in 1990 by Violeta Barrios de Chamorro (Chamorro, Violeta Barrios de), the candidate of the National Opposition Union. Chamorro's term expired in 1996. Ortega reemerged as the FSLN candidate for president in May 1996 but was defeated in the October elections by conservative candidate Arnoldo Alemán Lacayo. Ortega was also the FSLN candidate for president in 2001, and although he was defeated, he captured 42 percent of the vote.

Ortega remained influential in Nicaraguan politics, and in 2006 he once again ran for president as the FSLN's candidate. With strong support among Nicaragua's poor, he secured a large enough plurality to defeat conservative candidate Eduardo Montealegre. After his victory, Ortega stated that he would maintain the economic policies enacted since he left office, including the privatization of formerly state-owned businesses and a free-trade agreement with the United States. He also vowed to uphold civil liberties.