He was born at Magdeburg, Prussia, the son of William Augustine Steuben (1699-1783), a lieutenant of engineers. He accompanied his father to Russia when Friedrich Wilhelm I, King of Prussia and Elector of Brandenburg, ordered him into the service of Tsarina Anna I of Russia. After the accession of Frederick William II of Prussia to the throne, von Steuben returned to Germany with his father in 1740.
At fourteen he served as a volunteer in a campaign of the War of the Austrian Succession. In 1747, at age 17, he became a cadet in a Prussian infantry regiment and, two years later, received his patent (commission) as an ensign. Von Steuben served with distinction during the Seven Years' War.
He was made adjutant-general of the free corps in 1754 but re-entered the regular army in 1761, and became an aide to Frederick the Great in 1762. He was discharged from the army for obscure reasons in 1763 and subsequently suffered financial difficulties. In 1777 his friend, the Count St. Germain, then the French minister of war, persuaded him to go to the assistance of the American colonists, who needed discipline and instruction in military tactics. Steuben arrived at Portsmouth, New Hampshire, on December 1, 1777, and offered his services to Congress as a volunteer, stating that he wished no immediate compensation and would stake his fortunes upon the success of the American Revolutionary War. On February 23, 1778 von Steuben arrived at Valley Forge to help to train the Continental Army and in March 1778 he began drilling the inexperienced soldiers stationed there. By May, when he was made inspector-general, with the rank of major-general, he had established a thorough system of discipline and economy.
The results of his work were clear in the next campaign, particularly at the Battle of Monmouth, where he rallied the disordered, retreating troops of General Charles Lee. His Regulations for the Order and Discipline of the Troops of the United States (1779) was of great value to the army.
He was a member of the court-martial which tried Major John Andre in 1780, and after General Horatio Gates's defeat at Battle of Camden, Steuben was placed in command of the district of Virginia, with special instructions "to collect, organize, discipline and expedite the recruits for the Southern army."
Von Steuben became a citizen of the United States in 1783 and, following retirement from the army, resided in New York City where he became one of the most popular figures in the city. New York, Virginia, Pennsylvania and New Jersey gave him grants of land for his services, and Congress passed a vote of thanks and gave him a gold-hilted sword in 1784 and later granted him a pension of $2400. He died at Steubenville, New York.
USS Von Steuben was named in his honor.