Stoph was born in Berlin in 1914;^[2] his father died the following year in World War I. In 1928, Stoph joined the Young Communist League of Germany (Kommunistischer Jugendverband Deutschlands; KJVD) and in 1931 he joined the Communist Party of Germany. He was conscripted into the Wehrmacht from 1935 to 1937, and served during World War II from 1940 to 1945.

He was assigned to the 293rd Infantry Division's artillery regiment,^[3] and was awarded the Iron Cross 2nd Class and rose to the rank of Unteroffizier. As the war ended, according to historian Harris Lentz, "Stoph worked with the Communist-dominated Socialist Unity party and served on the party's executive committee from 1947."^[4]

Following the establishment of the GDR in 1949, Stoph became a member of the Socialist Unity Party's Central Committee and member of the Volkskammer in 1950. He was named to the Politbüro in 1953. He served as Interior Minister from 9 May 1952 to 1 July 1955, and as East Germany's first Defense Minister from 18 January 1956 to 14 July 1960.^[5][6] As defense minister, he was awarded the rank of Armeegeneral.

After having served as first deputy chairman of the Council of Ministers (first Deputy Prime Minister) from 1960 to 1964, he was named Chairman of the Council of Ministers (Ministerrat), or Prime Minister, in 1964 after the death of Otto Grotewohl. However, he had been serving as acting chairman of the council since October 1960 due to Grotewohl's poor health. He was initially thought to be the heir apparent to longtime party leader Walter Ulbricht, but his ascendancy was checked by Erich Honecker.^[6][7] After Ulbricht's death in 1973, Stoph became Chairman of the Council of State—a post equivalent in rank to president of the GDR. After Volkskammer elections in 1976, Honecker re-arranged the state and party leadership structure. Believing that Stoph's successor as prime minister, Horst Sindermann, was too liberal on economic matters, Honecker replaced him with Stoph.

During his first stint as Prime Minister, Stoph began a series of negotiations with West German Chancellor Willy Brandt in 1970. It marked the first ever meeting between the leaders of East and West Germany.

Stoph was known as a man who could be trusted to carry out the directives of the SED's Politburo; indeed, Honecker tapped him for his second stint in the premiership for this reason.^[6] For the most part, Stoph was a loyal supporter of Honecker. Although he nominally held the highest state post in the GDR, in practice he was outranked by Honecker, who derived most of his power from his post as general secretary of the SED.

However, Stoph joined the plot to remove Honecker in October 1989. At the Politburo meeting at which Honecker was voted out, Stoph made the motion to depose Honecker and replace him with Egon Krenz.^[8] A month later, on 13 November, Stoph and his entire 44-member cabinet resigned in response to public pressure. Stoph was subsequently arrested for corruption in December 1989. Despite his role in pushing Honecker out, the SED expelled Stoph on December 3, the same day it expelled Honecker. He was later spared detention on grounds of ill health. In 1994, a court in Berlin decided that his seized savings of 200,000 Deutsche Mark would not be returned to him.

Stoph died in Berlin at the age of 84 on 13 April 1999.^[6] He was buried in Wildau.