After Osterman"s father had fallen into disgrace, he was transferred from the Imperial Guards to the regular army and then sent abroad, where he would continue his education. In 1757, Osterman was in the Russian service again. He held diplomatic posts in Paris and Stockholm, where he would exercise big influence on Gustav III of Sweden.
In 1774, Osterman was appointed senator
In 1783, he was appointed Minister of foreign affairs of Imperial Russia, but would play only a secondary role on this post. His closest associates - Count Bezborodko, Prince Zubov, Fyodor Rostopchin - were the ones with real power, but they lacked the fluency in languages and oleaginous manner of address which Osterman was famed foreign
In 1796, Osterman was appointed the Chancellor of the Russian Empire, again as a puppet of real policy-makers. A year later, the new Emperor Paul dismissed him from office.
Ivan Osterman spent the last years of his life in Moscow.
As he had no children of his own, his title and last name were inherited by a nephew, the celebrated General Tolstoy.