Pelham was born in Laughton, Sussex, the son of Sir John Pelham, 3rd Baronet and his wife Lucy Sidney (daughter of Robert Sidney, 2nd Earl of Leicester).

Pelham was educated at Tonbridge School and Christ Church, Oxford.

In October 1679 he was returned for Lewes, serving until 1702; he subsequently chose to sit for Sussex, a seat he held until 1705.

In May 1686, he married Lady Grace Holles[1] (daughter of Gilbert Holles, 3rd Earl of Clare and Grace Pierrepoint), with whom he had two sons and five daughters: Both of Pelham's sons went on to serve as Prime Minister of the United Kingdom.

He served as a Lord Commissioner of the Treasury for three separate periods (March 1690–March 1692; May 1697–June 1699 and March 1701–May 1702); in 1706, he was elevated to the peerage as Baron Pelham of Laughton (having previously succeeded to his father's baronetage in 1703).