Born in Constantinople (now Istanbul) as a child of a leading Phanariote family. His father, Stefanos Karatheodori, was the personal physician of Sultan Mahmud II. After law studies in Paris, like many Phanariotes he pursued a career in the civil service of the Ottoman Empire. In 1874 he was appointed ambassador to Rome, and in 1878 he took part in the preliminary negotiations with Russia over the Treaty of San Stefano. Several months later was sent to Germany as the head commissioner of the Porte to the Congress of Berlin. There he was successful in changing the San Stefano peace terms in favour of the Ottoman Empire (Treaty of Berlin).