Goethals was born in Brooklyn, New York. He studied at the College of the City of New York before attending the United States Military Academy at West Point, from which he graduated in 1880. That same year he was appointed second lieutenant in the United States Army Corps of Engineers. He taught civil and military engineering at the academy until 1888. By 1891 had risen to captain.
In 1907 US President Theodore Roosevelt appointed George Washington Goethals chief engineer of the Panamal Canal. The building of the Canal had met with many difficulties and delays under previous chiefs. Goethals did much to make operations more efficient throughout the Canal project, with great attention to details large and small. A major part of his success was his particular attention to sanitation and control of disease carrying mosquitos, which greatly reduced incidence of disease and death among Canal workers.
After the war he headed his own private consulting civil and electrical engineering firm in New York City until his death in 1928.