Chater was born Khachik Pogose Astwachatoorean (Armenian: Խաչիկ Պօղոս Աստուածատուրեան) in Calcutta, British India, one of thirteen offspring of Armenian parents, Miriam and Chater Paul Chater. His father was a member of the Indian civil service.

Chater was orphaned at the age of seven, and he gained entry into the La Martiniere College in Calcutta on a scholarship. In 1864, he moved to Hong Kong from Calcutta and lived with the family of his sister Anna and her husband, the Armenian-born Jordan Paul Jordan (1820–1875).

In the early days in Hong Kong, he was an assistant at the Bank of Hindustan, China and Japan. Later, with the aid of the Sassoon family, he set up business as an exchange broker, resigned from the bank, and traded gold bullion and land on his own account. He took sea-bed soundings at night in a sampan and was thus instrumental in plotting the reclamation of Victoria Harbour. He is credited with a pivotal role in the colonial government's success in acquiring lands then held by the military, at a cost of two million pounds sterling.

In 1868, he and Sir Hormusjee Naorojee Mody formed brokerage company Chater & Mody, a largely successful business partnership in Hong Kong, although the firm's Hong Kong Milling Company (aka Rennie's Mill) failed in 1908 and resulted in the suicide of Albert Rennie.

In 1886, he helped Patrick Manson establish Dairy Farm, and he entered the Legislative Council that same year, taking the place of F.D. Sassoon.Also in 1886 Chater established Kowloon Wharf and Godown, predecessor of The Wharf (Holdings).

In 1889, he established Hongkong Land with James Johnstone Keswick. Hong Kong Land commenced the land reclamation project under the Praya Reclamation Scheme in 1890. Persuaded by the suggestion of temporary councillor Bendyshe Layton that Hong Kong should have electricity, they secretly acquired an old graveyard in Wan Chai, where they built one of the earliest power stations in the world.^[9] In 1890, the Hongkong Electric Company went into production.

Chater was enthusiastic in two sports: He played for the Hong Kong Cricket Club 1st XI, and was a thoroughbred horse racing enthusiast. He reportedly never missed the weekly races at the Happy Valley Racecourse in 60 years. He set up the Chater Stable in Hong Kong in 1872 that won many races at Happy Valley. The Hong Kong Champions & Chater Cup, the Group One third leg of the Hong Kong Triple Crown, is named in his honour.

In 1896, Chater joined government ranks when he was appointed to the Executive Council, and served there until 1926, the year of his death.He was knighted in the 1902 Coronation Honours, receiving the accolade in person from King Edward VII at Buckingham Palace on 24 October that year.

In 1901, Chater constructed a very fine home with imported European marble at 1, Conduit Road, Hong Kong which he named 'Marble Hall'. Therein, he housed his collection of fine porcelain. To commemorate the coronation of King Edward VII in 1902, Chater presented a statue in bronze of the King to Hong Kong, executed by George Edward Wade and unveiled at Statue Square in 1907. In 1904, Chater single-handedly financed the construction of St. Andrew's Church.

Some titles and positions held by Chater:

• Master of the Perseverance Lodge, 1873
• Steward at the Royal Hong Kong Jockey Club
• Chairman of the Board of Stewards of the Royal Hong Kong Jockey Club, 1892–1926
• Senior Justice of the Peace in Hong Kong
• District Grand Master of Hong Kong and South China, 1881–1909
• Director of Dairy Farm Co. Ltd., 1886
• Consul for Siam in Hong Kong
• Treasurer and Chairman of the Queen Victoria Jubilee Committee, 1887
• Member of the Légion d'honneur by the French Government at Tonkin, 1892
• Member of the Public Lighting Committee, 1896
• Member of the Governor's Executive Council, 1896
• Chairman of the Queen Victoria Diamond Jubilee Committee, 1897
• Companion of the Order of St Michael and St George, 1897
• Honorary degree of LL.D. by the University of Hong Kong for services as the Honorary Treasurer, 1923