[2] Krusenstern was born in Hagudi (Haggud), Harrien County, Estonia (then part of the Russian Empire) to a Baltic German noble family.

His patrilineal ancestors descended from the Swedish noble family von Krusenstierna [sv], and had remained in Estonia after Sweden ceded the country to the Russian Empire in 1721.

[3] After publishing a paper pointing out the advantages of direct communication by sea between Russia and China by passing Cape Horn at the southern tip of South America and the Cape of Good Hope at the tip of South Africa, he was appointed by Tsar Alexander I to make a voyage to the Far East coast of Asia to endeavour to carry out the project.

[3] Under the patronage of Alexander, Count Nikolay Petrovich Rumyantsev and the Russian-American Company, Krusenstern led the first Russian circumnavigation of the world.

The two ships, Nadezhda ('Hope', formerly the British merchant Leander) under the command of Krusenstern, and Neva (formerly the British merchant Thames) under the command of Captain-Lieutenant Yuri F. Lisianski, set sail from Kronstadt in August 1803, rounded Cape Horn of South America, reached the northern Pacific Ocean, and returned via the Cape of Good Hope at South Africa.

Upon his return, Krusenstern wrote a detailed report, "Reise um die Welt in den Jahren 1803, 1804, 1805 und 1806 auf Befehl Seiner Kaiserlichen Majestät Alexanders des Ersten auf den Schiffen Nadeschda und Newa" ("Journey around the World in the Years 1803, 1804, 1805, and 1806 at the Command of his Imperial Majesty Alexander I in the Ships Nadezhda and Neva") published in Saint Petersburg in 1810.

He was also a member of the scientific committee of the marine department, and his contrivance for counteracting the influence of the iron in vessels on the compass was adopted in the navy.