Edward Gibbon Wakefield was born in London on 20 March 1796, eldest son of Edward Wakefield (1774-1854), philanthropist and statistician, and grandson of merchant Edward Wakefield (1750-1826) and author and philanthropist Priscilla Wakefield (1751-1832). He was the brother of William Hayward Wakefield (1803-1848), and nephew of Daniel Wakefield (1776-1846). Edward Gibbon Wakefield was educated at Westminster School and at Edinburgh's Royal High School. By 1814, he was serving with the British embassy in Turin, and in 1820 with the embassy in Paris. In 1826 however, he was convicted - with his brother William - of tricking a wealthy heiress into marrying him, and both he and his brother were sent to prison for three years.

While he was in prison Wakefield studied colonial affairs and prepared material for publication into a work entitledFacts relating to the punishment of death in the metropolis(1831). He put forward a theory of systematic colonisation and enunciated his views inA letter from Sydney(1820), inEngland and America(1833), and inA view of the art of colonisation(1849). He saw a relationship between the social conditions in Britain and the notion of colonial settlement, viewing the latter as a chance for Britons to take their skills overseas under a familiar constitutional tradition and in a recognisable social framework. Land would be sold in small lots at moderate prices, with the funds gathered then being used to support further colonisation, and some self-government would be allowed. In 1834, the South Australian Association was formed with a view to founding a colony on Wakefield's principles.

In 1838, Wakefield accompanied Lord Durham, John George Lambton, 1st Earl of Durham to Canada and influenced the new Governor-General'sReport on the affairs of British North Americawhich proposed uniting the Canadian provinces and granting them full control of their internal affairs. In 1839, he formed the New Zealand Land Company - an amalgamation of an earlier New Zealand Association and a New Zealand Colonization Company - with the aim of settling and guiding the colony of New Zealand. His brother William would control operations in New Zealand, while Wakefield himself would direct the Company from London where he could continue to argue his case with the Colonial Office. In 1849 he founded - with John Robert Godley (1814-1861) - a Church of England settlement at Canterbury in New Zealand. In 1852, Wakefield left England for New Zealand with his son, landing in Port Lyttleton in February 1853. At once, both father and son launched themselves into New Zealand politics, with the elder Wakefield advising the acting-Governor Colonel Robert Henry Wynyard (1802-1864). In 1854 however, he suffered a complete breakdown in his health. Edward Gibbon Wakefield died in Wellington, New Zealand, on 16 May 1862.

His only son, Edward Jerningham Wakefield (1820-1879), who had written on New Zealand based on his earlier stay there, as well as politican, had been elected to the House of Representatives in 1854, representing a Canterbury constituency. He had accompanied his father to Canada in 1838, and first went to New Zealand in 1839, returning to England in 1845. With John Robert Godley, he edited his father's correspondence on the foundation of the Canterbury settlement with the titleThe founders of Canterbury(1868).