Sebastian Kräuter attended elementary school in Nitzkydorf. He studied philosophy and theology at the seminary in Timişoara. He was ordained priest on 2 June 1946 at the Temeswarer Dom by bishop Augustin Pacha. Between 1946 and 1964 he was a curate at the parish Faire, and in 1983 became the pastor of the community.
Kräuter was ordained bishop of the Diocese of Timişoara on 28 April 1990. He was co-editor and author of the foreword of the 1995 biography of his predecessor, Augustin Pacha "Erinnerungen an Bischof Pacha: Ein Stück Banater Heimatgeschichte". Kräuter stepped down in 1999 in favor of Martin Roos.
Kräuter died on January 29, 2008 and was buried on February 1, 2008 in the crypt of the Temeswarer Domes.