Breitscheid, the son of a bookshop manager, was born in Cologne. He studied at a Gymnasium (an academically-oriented secondary school) in Cologne. From 1894 to 1898 he studied Economics at the Universities of Munich and Marburg; in 1898 he obtained his doctorate with a dissertation entitled "Land Policy in the Australian Colonies." From 1898 to 1905, he worked as an editor and correspondent for newspapers with a middle-class, Liberal outlook.
Between 1903 and 1908, Breitscheid was a member of the Free-minded Union. In 1908, he numbered among the founding members of the left-liberal Democratic Union (DV) and, until the Reichstag elections of 1912, served as its chair.
After the DV founded in the 1912 elections, Breitscheid joined the SPD, switching five years later to the more leftist splinter faction, the USPD (Independent Social Democratic Party). During the years of the First World War, he was the SPD faction's spokesman for foreign policy, as well as member of the German delegation to the League of Nations. After Adolf Hitler and the Nazi Party came to power in 1933, Breitscheid emigrated to France. There, efforts were undertaken by the Refugee Committee, under Varian Fry, to get him out of Vichy France, along with Rudolf Hilferding. These efforts were not successful, and in 1941, approximately a year into the German occupation of France, he was arrested by the Gestapo and interned in the infamous Buchenwald concentration camp.
The precise details of Breitscheid's last years are known only sketchily, as the sole information available stems from Nazi sources. According to the Völkischer Beobachter (the official Nazi Party organ), Breitscheid, along with Communist Party leader Ernst Thälmann, perished during an Allied air raid on August 28, 1944. Varian Fry, among others, believed that Breitscheid was murdered by the Gestapo on the orders of Hitler or another senior Nazi Party official. He is buried in the Friedrichsfelde Central Cemetery in the borough of Lichtenberg in Berlin.
Today, a plaza in the centre of Berlin is named after Breitscheid, while in Oberhof, Kaiserslautern, Potsdam, Leverkusen, and Dresden, as well other parts of eastern Germany, there are streets bearing his name.
Some of the streets named after him in eastern Germany have, since 1989, been renamed.