Fessenden was a Whig (later a Republican) and member of the Fessenden political family. He served in the United States House of Representatives and Senate before becoming Secretary of the Treasury under President Abraham Lincoln during the American Civil War.

Fessenden was born in Boscawen. He graduated from Bowdoin College and became a lawyer, practicing with his father Samuel Fessenden, who was also a prominent anti-slavery activist. He served four non-consecutive terms in the Maine House of Representatives, and he was elected for one term in the United States House of Representatives. He was elected in 1854, with the support of Whigs and Anti-Slavery Democrats, to the U.S. Senate. Upon taking office, he immediately began speaking against the Kansas-Nebraska Act and participated in the organization of the United States Republican Party, being re-elected to the Senate from that group in 1860.

He served as chairman of the Finance Committee during the 37th through 39th Congresses, which led to his Cabinet appointment. He also served as a chairman of the Committee on Public Buildings and Grounds during the 40th Congress, the Appropriations Committee during the 41st Congress and the U.S. Senate Committee on the Library, also during the 41st Congress.

Following the close of the Civil War, which he helped finance on the Union side in cooperation with Lincoln, his predecessor Salmon P. Chase and members of the Congress, he was considered a moderate, rather than Radical, Republican.

Two of his brothers, Samuel C. Fessenden and T.A.D. Fessenden, were also Congressmen. He had three sons who served in the American Civil War: Samuel Fessenden, killed at the Second Battle of Bull Run, and Brigadier-General James D. Fessenden and Major-General Francis Fessenden, the latter of whom wrote a two-volume biography of his father which was published in 1907.