He was the illegitimate son of Sir Hugh Smithson, later known as Sir Hugh Percy, Baronet, 1st Duke of Northumberland, K.G., and Elizabeth Hungerford Keate, and was born in 1765 in France. Elizabeth Keate had been married to James Macie, and so the name Smithson first bore was James Lewis Macie. His mother later married Mark Dickinson, by whom she had another son.
When his mother died in 1800, he and his half-brother inherited a sizable estate. He changed his name at this time from "Macie" to "Smithson." He died June 27, 1829, in Genoa, Italy. His will left his fortune to his nephew, son of his half-brother, but stipulated that if that nephew died without children (legitimate or illegitimate), the money should go "to the United States of America, to found at Washington, under the name of the Smithsonian Institution, an establishment for the increase and diffusion of knowledge among men."
The nephew, Henry Hungerford Dickinson, died without heirs in 1835, and Smithson's bequest was accepted in 1836 by the United States Congress. A lawsuit (in Great Britain) contesting the will was decided in the favor of the United States in 1838. The sum left amounted to about a half-million dollars. There was a good deal of controversy about how the purposes of the bequest could be fulfilled, and it was not until 1846 that the Smithsonian Institution was founded.
James Smithson had never been to the United States, and the motive for the specific bequest is unknown.