George Peabody was born February 18, 1795, in Danvers, Massachusetts, to Thomas and Judith (Dodge) Peabody. He was apprenticed at the age of 12 to Captain Sylvester Proctor and worked in his general store in Danvers. He continued his practical business education in 1811 when he worked for his elder brother, David, in a Newburyport drapery shop. In 1812, at the age of seventeen, George Peabody set up a store in the Washington, D.C. neighborhood of Georgetown with his uncle, John Peabody.

In 1815, Peabody joined Elisha Riggs to create a wholesale dry good firm entitled Riggs Peabody & Co., which they shortly thereafter moved to Baltimore. Peabody would live and work in Baltimore for the next twenty years. In addition to his domestic business, Peabody was a notable name and personage on the international market. Peabody spent a considerable amount of time over the next several decades in London. In 1829, the company restructured. Peabody became a senior partner with Elisha and Samuel Riggs as junior partners. At this time the company was renamed Peabody Riggs & Co.

The 1837 economic panic led to financial failures both domestically and abroad. Two years later, Peabody notified Peabody Riggs & Co. of his retirement from the firm, though he remained a financial advisor.

In 1844, Peabody founded a banking firm, George Peabody & Co. out of London, which dealt with American railroads in addition to dry goods. Peabody worked in partnership with the firm Wetmore & Cryder. This relationship was suspended in 1847 due to the British financial crisis. In 1854, Peabody took on Junius Spencer Morgan (father of J.P. Morgan) as a partner in George Peabody & Co. Ten years later, Peabody retired from the firm which was then renamed J.S. Morgan & Co.

In addition to his vast business acumen, George Peabody was a world-renowned philanthropist. Peabody founded the multi-disciplinary Peabody Institute at Johns Hopkins University in 1857, followed by the Peabody Donation Fund (now the Peabody Trust) of London which, in addition to other works, continues to provide low-income housing. In 1866 he founded Harvard University's Peabody Museum of Archaeology and Ethnology and Yale University's Peabody Museum of Natural History. The Peabody Education Fund (founded to develop education in the American South in 1867) created the George Peabody College for Teachers which is now a part of Vanderbilt University. Peabody also founded several public libraries and other schools of education.

Peabody died on November 4, 1869 in England where his body was laid in state in Westminster Abbey before being returned to the United States and buried in Harmony Grove Cemetery in Salem, Massachusetts, on February 8, 1870.