Monnet was born in Cognac, Charente, into a family of cognac merchants. At the age of sixteen, he abandoned his university-entrance examinations part way through and moved to London where he spent some years in the City of London with Mr. Chaplin, the agent of his father's company. Subsequently, he travelled widely — to Scandinavia, Russia, Egypt, Canada, and the United States — for the family business.

In 1914, Monnet was excused from military duty for health reasons but he set to making himself useful in other ways, namely by tackling the looming problem of organizing supplies, which the Allies were unable to resolve and which could have compromised the outcome of the conflict. Monnet believed that the only path that would lead to an Allied victory lay in the merging of France and Britain's war efforts and he reflected on a concept that would co-ordinate war resources. In 1914, young Monnet was allowed to meet French Premier René Viviani on this issue. The French government agreed in principle upon his plans. During the first years of the war Monnet had not much success, promoting and pressing internationally for a better organization of the allied economic cooperation. But finally, stronger combines like the Wheat Executive (end of 1916) and the Allied Maritime Transport Council (end of 1917) were set into work and had a big share in winning the war.

Due to his contributions to the war efforts, Monnet, at the age of thirty-one, was named Deputy Secretary General of the League of Nations upon its creation in 1919 by French premier Georges Clemenceau and British statesman Arthur Balfour.

Soon disillusioned with the League because of its laborious unanimous decision-making processes, Monnet resigned in 1923 in order to devote himself to managing the family business, which was experiencing difficulties. He returns into international politics and, as an international financier, he proved to be instrumental in the economic recovery of several Central and Eastern European nations, helping to stabilise the Polish zloty in 1927 and the Romanian leu in 1928. In 1929, his experience in international finance led him to found and co-manage the Bancamerica-Blair, a bank in San Francisco. From 1934 to 1936, at the invitation of Chiang Kai-shek, Monnet lived in China, assisting with the reorganization of the Chinese railway network.

In December, 1939, Jean Monnet was sent to London to oversee the collectivization of British and French war production capacities. Monnet's influence inspired Charles de Gaulle and Winston Churchill to accept a plan for a union of France and the United Kingdom to rival the Pact of Steel alliance between Germany and Italy.

In August 1940, Jean Monnet was sent to the United States by the British Government as a member of the British Supply Council, in order to negotiate the purchase of war supplies. Soon after his arrival in Washington, D.C., he became an advisor to President Franklin Delano Roosevelt. Convinced that America could serve as "the great arsenal of democracy" he persuaded the president to launch a massive arms production program to supply the Allies with military material. Shortly thereafter, in 1941, Roosevelt, with Churchill's agreement, launched the Victory Program, which represented the entry of the United States into the war effort. After the war, the British economist John Maynard Keynes was to say that through his co-ordinating Monnet had probably shortened World War II by one year.

In 1943, Monnet became a member of the National Liberation Committee, the would-be French government in exile in Algiers. During a meeting on 5 August 1943, Monnet declared to the Committee:

"There will be no peace in Europe, if the states are reconstituted on the basis of national sovereignty... The countries of Europe are too small to guarantee their peoples the necessary prosperity and social development. The European states must constitute themselves into a federation..."

Following World War II France was in severe need of reconstruction. To rebuild, France was completely dependent on coal from Germany's main remaining coal-mining areas, the Ruhr area and the Saar area. (The German coal fields in Upper Silesia had been handed over for "Polish administration" by the Allies in 1945, see Oder-Neisse line.)

In 1945 Monnet proposed the Monnet plan, also known as the theory of l’engrenage, not to be confused with Schuman plan, to take control of the remaining coal-producing German areas and redirect the production away from German industry and into French industry instead, permanently weakening Germany and raising the French economy considerably above its pre-war levels. The plan was adopted by Charles de Gaulle in early 1946.