Carte was born in Soho in London. His father was an instrument salesman and Carte was raised with a musical background. He attended the University School of London, but left before graduation in order to take a larger role in his father's business. Between 1868 and 1877, he wrote the music for three comic operas, Doctor Ambrosias—His Secret, Marie and Happy Hampstead. At the same time, he was beginning to build an operatic and concert management company.
In 1875, he became the business manager of the Royalty Theatre. The first show he booked was Jacques Offenbach's La Périchole. Because the opera was short, he commissioned William S. Gilbert and Arthur S. Sullivan to write a one-act operetta to fill out the evening, which became Trial by Jury. Building on its success, Carte entered a partnership with Gilbert and Sullivan and formed the Comedy Opera Company to produce their future works, along with the works of other British lyricist/composer teams. The first operetta produced was The Sorcerer in 1877.
By the fourth full-length collaboration between Gilbert and Sullivan, Carte was able to build his own theatre, the Savoy. On October 10, 1881, the new theatre opened with the show Patience. At the time, the Savoy seated nearly 1300 people and was the first public building to be lit entirely with electric lights. Prior to the first performance, Carte stepped on stage and broke a lit lightbulb to demonstrate the safety of the new technology.
Gilbert and Sullivan had a tumultuous relationship, and Carte was frequently able to soothe their animosity by a mixture of friendship and business wrangling. In the late 1880s, as the problems grew and Sullivan and Gilbert became more adamant in their refusals to work together, Carte built the Royal English Opera House in Cambridge Circus close toCovent Garden to host what he hoped would be a birth of British opera. The first production was of Sullivan's only grand opera, Ivanhoe. When it closed, there was nothing to replace it and the venture failed, the new Opera House becoming the Palace music hall.
In 1888, he married Helen Lenoir (a.k.a. Helen Cowper-Black) who had worked as his assistant from the 1870s and continued to work with him until his death, after which she took over the running of the company.
Carte died on April 3, 1901, leaving behind the D'Oyly Carte Opera Company, the Savoy Theatre and the Savoy Hotel.