Grotewohl was born in Braunschweig. A leader of the Social Democratic Party in the Soviet occupation zone of Germany after World War II, he led his party into a merger with the Communist Party, led by Wilhelm Pieck, in April 1946, forming the new Socialist Unity Party (SED). Grotewohl became the first Ministerpräsident (prime minister) of the German Democratic Republic from October 1949 and remained in that office until his death. With the creation of the Council of Ministers (Ministerrat) of the GDR in November 1954, he also became the first chairman of the Council, while retaining the title of Ministerpräsident.
In a major speech to an SED party conference on 28 March 1956, Grotewohl condemned abuses in the legal system. He denounced illegal arrests, called for more respect for civil rights, and even asked the parliament to develop lively debate. He also made a veiled criticism of Justice Minister Hilde Benjamin's handling of political cases which had been notoriously brutal.
He was awarded the Order of Karl Marx, the GDR's highest decoration, in 1952. After his death, the Wilhelmstrasse in East Berlin was renamed Otto-Grotewohl-Straße in his honor; the street retained this name until 1991, following German reunification. On 15 April 1986, the present-day Mohrenstraße U-Bahn station in eastern Berlin, then known as the Thälmannplatz station, was also renamed Otto-Grotewohl-Straße.