Colnett was born in Devonport in 1753 and joined the Royal Navy in June 1770. His early career was distinguished by service under James Cook during Cook's second voyage of exploration, an experience that would shape the rest of his life. The sea otter pelts that Cook's crew had obtained along the northwest coast of America sold for extraordinary prices in Canton, China, and the idea of a regular fur trade route between the Pacific Northwest and China seized the imagination of British merchants. Colnett, with his navy credentials and Pacific experience, was a natural choice to lead such ventures. Between 1786 and 1788, he commanded his first trading expedition, captaining the Prince of Wales alongside the sloop Princess Royal under Charles Duncan. They collected furs along the coast of present-day British Columbia, becoming among the first Europeans to set foot on the southern Haida Gwaii islands and to contact the Tsimshian and southern Heiltsuk peoples.

Colnett's second expedition, in 1789, was meant to establish a permanent trading post at Nootka Sound, to be named Fort Pitt on land that fellow trader John Meares claimed to have purchased from Chief Maquinna of the Nuu-chah-nulth. Spain saw it differently. Martinez, operating under orders to assert Spanish sovereignty, was troubled by the Argonaut's cargo of construction materials and Chinese workers. The confrontation escalated from diplomatic tension to personal insults. Martinez seized the Argonaut, the Princess Royal, and the North West America, imprisoning Colnett and his crews. The prisoners were taken to the Spanish naval base at San Blas, Mexico, where Colnett remained in custody until May 1790. Back in London, the arrest of a Royal Navy officer was particularly inflammatory. King George III and Prime Minister William Pitt mobilized for war. Spain, without French support, backed down, and the resulting Nootka Conventions established a framework for shared access to the coast that would reshape the geopolitics of the Pacific Northwest.

Even captivity could not cure Colnett's appetite for trade. Upon his release, he sailed the returned Argonaut north to Clayoquot Sound, resumed fur trading, and spent five months along the coast, acquiring about 1,100 sea otter pelts. A complicated series of diplomatic shuffles over the return of the Princess Royal led Colnett to Hawaii, where he nearly seized the ship by force from its Spanish custodian before being talked down. He eventually reached Macau only to find that China had banned fur imports as a wartime measure against Russia. Undeterred, Colnett sailed to Japan in what was the first British attempt to re-open trade there since 1673. He failed, as the East India Company's ship Return had failed two centuries earlier, but the audacity of the attempt captures the man's character. He eventually sold his remaining furs in northern China and his cargo to the East India Company for 9,760 pounds.

Colnett's final major voyage, from 1793 to 1794, took him far from the fur trade. Sailing the Rattler for Samuel Enderby and Sons, he surveyed potential anchorages for the British whaling fleet throughout the South Pacific and South Atlantic. He discovered a new whaling ground near 40 to 45 degrees south latitude, explored the coast of Chile, and spent months in the Galapagos Islands, where he mapped and named several islands, including Chatham and Hood, which did not appear on any chart he possessed. His description of the giant land tortoises was enthusiastic: he called them the most delicious food his crew had ever tasted. He returned to England in November 1794, drew his own charts, and published his account in 1798. Several places around the Pacific bear his name, including Mount Colnett on Meares Island, where his story and the fur trade's story had so dramatically intersected.