Albert Goldsmid was born in Poona, India, the son of Jessie Sarah (née Goldsmit) and Henry Edward Goldsmid. Both of his parents were the great-grandchildren of Aaron Goldsmid, the founder of the Goldsmid family, and his mother was the sister of Major-General Frederic John Goldsmid. His American-born maternal grandmother, Eliza Frances Campbell, was the granddaughter of Revolutionary War aide-de-camp David Franks. His father and maternal grandfather were born Jewish, and had converted to Christianity to achieve social and economic opportunities that were denied Jews. As an adult, Goldsmid converted to Judaism and always maintained that being Jewish had not impinged upon his military career. In his later years, he identified himself as the living personification of George Eliot's Daniel Deronda. Eliot's book was transformative for Zionist development and understanding amongst Jews and non-Jews. Goldsmid's wife, Ida Stewart Hendriks, was also a convert to Judaism; she had been raised a Christian by her Protestant mother and Jewish-born father (Ida Hendriks' paternal great-great-great-grandfather had also been Aaron Goldsmid).
Goldsmid is buried at the Willesden United Synagogue Cemetery, London. He was the great-grandfather of American-born entertainer Christopher Guest, who succeeded as the 5th Baron Haden-Guest in 1996.
In June 1866, having passed out from Sandhurst, Goldsmid was commissioned into the 104th Foot. He became adjutant of battalion in 1871, captain in May, 1878, major in 1883, lieutenant-colonel in 1888, and colonel on 21 April 1894. In 1892 Colonel Goldsmid was selected by Baron de Hirsch to supervise the Jewish colonies in Argentina, but retired from the task to take up his appointment as colonel-in-command of the Welsh regimental district at Cardiff in 1894. In 1897 he was promoted chief of staff, with the grade of assistant adjutant-general in the Thames district.
At the departure of the Aldershot staff with Sir Redvers Buller in the conflict with the Boers in 1899, he acted as chief staff-officer at the camp at Aldershot, and was entrusted with the duties of mobilization. In December, 1899, when the sixth division of the South-African field force was mobilized, Goldsmid was selected as chief staff-officer to General Thomas Kelly-Kenny with the grade of assistant adjutant-general, and in that capacity was present at the battle of Paardeberg. During the earlier stages of the war he was commandant of the Orange River, Herbert, and Hay districts, 1900. After his service in South Africa, he was placed on half-pay in July 1901.
Goldsmid was the highest ranking Jewish officer in the British Army in the 19th century.
Colonel Goldsmid was an ardent Zionist, and head of the Hovevei Zion of Great Britain and Ireland. From 1896-1904 he was associated with Theodor Herzl as the head of the British Zionist movement and the key contact in the failed Zionist effort to establish a British Zionist protectorate in the Northern Sinai area of El Arish.
- Sokolow, Nahum (1919). History of Zionism, 1600-1918, Volume 1. Longmans, Green and Co.
- Lehman, Emil (1996). The tents of Michael: the life and times of Colonel Albert Williamson Goldsmid. University Press of America. p. 5. ISBN 0-7618-0426-9.
- The Tents of Michael, The Life and Times of Colonel Albert Williamson Goldsmid, Emil Lehman, University Press of America, 1996 978-0761804260
- Kadish, Sharman (1995). 'A good Jew and a good Englishman': the Jewish Lads' & Girls' Brigade, 1895-1995. Vallentine Mitchell. pp. 4, 5, 6. ISBN 0-85303-306-4.
- World Union of Jewish Studies (1993). Proceedings of the ... World Congress of Jewish Studies, Part 2, Volume 3. World Union of Jewish Studies.
- The London Gazette: . 26 July 1901.
- The Complete Diaries of Theodor Herzl, edited by Raphael Patai, translated by Harry Zohn, vol 1, Herzl Press and Thomas Yoseloff Press, New York, New York 1960.