Born in Groton in the British Crown Colony of Connecticut, he went to sea as a cabin boy at the age of 14, and by the age of 24 was captain of a West Indian brig in which he visited the South Pacific for the first time.
A successful trader, Fanning made a fortune in the China trade, killing seals in the South Pacific and exchanging their skins in China for silks, spices, and tea; which he in turn sold in New York City. As master of the Betsey in 1797-1798, he discovered three South Pacific Islands — Fanning, Washington, and Palmyra — which are collectively known as the Fanning Islands. (Fanning Island, today known as Tabuaeran, is today part of Kiribati, while Palmyra, claimed by the Hawaiian Government in 1862 and owned for many years by a Hawaiian family, was purchased in 2000 by the Nature Conservancy for an ongoing study of global warming and its effect on coral reefs.)
When he discovered Palmyra Atoll, Fanning was sleeping and the ship was in command of the first mate. Fanning awoke three times in the night, and he took this as a premonition, ordering the first mate to heave to. In the morning, the ship resumed its travel and reached the reef of Palmyra in less than a mile. Had the ship continued its course at night, the entire crew might have perished.
Acting for American investors, Fanning was agent for more than 70 commercial expeditions and voyages. His partnership Fanning & Coles built the ship Tonquin in 1807, sailed her around the world several times and sold her for $37,000 to John Jacob Astor's Pacific Fur Company. Later the Tonquin was burned by Indians in the northwest. In 1829 he was instrumental in sending out the first American naval exploring expedition, and was greatly responsible for Congress's authorizing of the Wilkes Expedition. Fanning's memoirs, Voyages Around the World, were published in 1833. He died in New York City.