Foster was born in North Sheilds, England of a primarily Quaker family, but his family moved south to London in 1830, where his father founded M. B. Foster & sons — a successful beer-bottling company. He was schooled at Hitchin, Hertfordshire and on leaving initially went into his father's business. However, noticing his talent for art, his father secured an apprenticeship with the wood-engraver, Ebenzer Landells, where he worked on illustrations for Punch magazine and the Illustrated London News.
On leaving Landells' employ, he continued to produce work for the Illustrated London News and the Illustrated London Almanack. He also found work as a book illustrator and, during the 1850s, trained himself to paint in watercolours. His illustrations of Longfellow's Evangeline and books of poetry by other contemporaries were a great success, and he quickly became a successful artist in watercolours. Birket Foster became an Associate of the "Old" Watercolour Society in 1860 and exhibited some 400 of his paintings at the Royal Academy over more than 2 decades.
Birket Foster travelled widely, painting the countryside around Scotland, the Rhine Valley, the Swiss lakes and in Italy, especially Venice. In 1863 he moved to Witley, near Godalming in Surrey where he had an elaborate Tudor-style house ("The Hill") built. Being friendly with Edward Burne-Jones and William Morris, he had the house decorated and furnished in contemporary style, with tiles and paintings by Burne-Jones and Morris' firm, Morris and Company. The same year he published a volume of "English Landscapes," with text by Tom Taylor.
Among his artist friends and associates were Fred Walker, Charles Keene and William Quiller Orchardson.
Although he had painted great numbers of landscape scenes from Scotland to the Mediterranean, it was after moving to Witley that Birket Foster produced the works for which he is best known—a sentimentalised view of the contemporary English countryside, particularly in the west Surrey area. Although criticised for their idealised view of rural life, they were recognised for their detail and execution. Birket Foster's work (along with that of other artists) was used by Cadbury's the chocolate manufacturer, on the cover of their chocolate boxes from the 1860s onwards.
He became ill in 1893 and moved to Weybridge. He continued painting, but died on 27 March 1899. His obituary in The times referred to him as "certainly the most popular water-colour artist of our time". He is buried at All Saints' Church in Witley. When his father, Myles Birket Foster died, the artist son's obituary was published.
In 1864, he married Francis Watson, the daughter of Dawson Watson, and sister of the artist John Dawson Watts. Their eldest son, Myles Birket Foster (1851–1922), was an organist who composed cantatas for children's voices and wrote a History of the Philharmonic Society, 1913.