Boulton was born in Birmingham, England where his father, Matthew Boulton the elder, was a "toymaker" (a manufacturer of small metal articles of various kinds). In 1749 he became a partner in his father's business (and the general manager), and in 1755 the Boultons acquired Sarehole Mill, which they used for rolling sheet metal. In 1756 Boulton married Mary Robinson, a distant cousin and heir to a large fortune, she died around 1760 and they had no children. Shortly after his father's death in 1759, Boulton went into partnership with John Fothergill and in 1762 they established the Soho Manufactory, two miles north of Birmingham. Here they undertook the manufacture of artistic objects in metal, as well as the reproduction of oil paintings by a mechanical process in which he was associated with Francis Egginton (1737-1805), who subsequently achieved a reputation as a worker in stained or enamelled glass. In this he was also encouraged by Robert Adam. Between 1762 and 1775 he established a strong reputation as a craftsman; his works at Soho were widely known for excellent and artistic workmanship.
About 1767, Boulton, who was finding the need of improving the power supply for his machinery, made the acquaintance of James Watt, who on his side appreciated the advantages offered by the Soho works for the development of his steam-engine.
In 1772 Watt's partner, Dr. John Roebuck, got into financial difficulties, and Boulton, to whom he owed £1200, accepted the two-thirds share in Watt's patent held by him in satisfaction of the debt. Three years later Boulton and Watt formally entered into partnership, and it was mainly through the energy and self-sacrifice of the former, who devoted all the capital he possessed or could borrow to the enterprise, that the steam engine was at length made a commercial success. It was also owing to Boulton that in 1775 an act of parliament was obtained extending the term of Watt's 1769 patent to 1799. In 1800 the two partners retired from the business, which they handed over to their sons, Matthew Robinson Boulton and James Watt junior.
In 1788 Boulton turned his attention to coining machinery, and erected at Soho a complete plant with which he struck coins for the Sierra Leone and East India companies and for Russia, and in 1797 produced a new copper coinage for Britain. In 1797 he took out a patent in connection with raising water on the principle of the hydraulic ram.
- Boulton's secret to improving workers' productivity was by equipping his works with all kinds of labour-saving devices made by the use of clever designs with interchangeable components, and making use of technology to reproduce designs, each of which was efficiently manufactured in quantity.
- Instead of putting work out in the traditional way to toymakers around the town, he brought all the functions of a modern business, including design and marketing, under his control.
- In the 1770s he introduced a very early social insurance scheme, funded by workers' contributions of 1/60th of their wages, and which paid benefits of up to 80% of wages to staff who were sick or injured or killed.
- He ensured that the works were clean, well lit and well ventilated.
- He refused to employ young children.
- The Lunar Men: Five Friends Whose Curiosity Changed the World by Jenny Uglow (Faber & Faber, 2002)