He was born in County Limerick to businessman Matthew Toohey and Honora Hall. His family migrated to Melbourne in 1841, where his father was involved in unsuccessful business dealings that eventually forced them to move to New South Wales in 1866.
Toohey settled near Lismore, and around 1869 established a cordial factory. On 26 August 1871 Toohey married Sarah Doheny, with whom he had five children. He would later marry Annie Mary Murphy Egan, a widow, in New Zealand.
In 1902 he embarked on a world tour, but he died in Chicago the following year.
In 1892 he was appointed to the New South Wales Legislative Council, where he was known as a supporter of Irish nationalism and as a prominent Catholic.
