According to his memoirs, Stieber was born in Merseburg, Prussian Saxony. His parents were Hypolith Stieber, a minor government official who later entered the Lutheran ministry, and Daisy Cromwell, an English noblewoman. He began studying German law at Friedrich Wilhelm University in Berlin against the wishes of his father, who desired a career for him in the Prussian Church. He was then employed in 1841 in a criminal court. When his father learned that he was studying law, he ended all funding towards his education. In order to earn his tuition, young Stieber began working for the Berlin police. Finding this much more exciting than Law, he obtained a promotion to Inspector of Division IV, the Criminal Division. After the Revolution of 1848, he was promoted by King Frederick William IV of Prussia as chief of police. During the winter of 1850, he was ordered to investigate an exiled political extremist named Karl Marx. His memoirs state that, posing as a doctor, he bluffed his way into Marx's London household and stole the membership listings of Marx's Communist League. The information in the files was sent to France and also to several German States. Many of Marx's associates were then sentenced to long prison terms.
Stieber's memoirs also describe his involvement with matters embarrassing to the House of Hohenzollern. He refers to an occasion when a Greek swindler named Simonides bilked the Berlin Academy of Science out of 5,000 talers via a forged Ancient Greek manuscript. As the money had come from the king's private purse, Stieber was ordered to get it back as discreetly as possible. Using an elderly circus performer as an interpreter, Stieber forced Simonides to return the money by threatening to hand him over to the notoriously brutal Greek police. With the money secured, Simonides was escorted to the border and ordered never to return to Prussia.
Stieber also investigated a counterfeiting gang in the Rhineland and insider trading on the Berlin stock exchange. He also became something of an expert on the prostitution trade in Berlin and recruited many of its denizens as informants.