He joined the Kaiserliche Marine (Imperial Navy) in 1878 and initially served in the main German naval base at Kiel.
He was promoted rear admiral in 1910, when he became second Admiralty officer of the Scouting Forces of the High Sea Fleet. Two years later he was appointed head of the Cruiser Squadron in East Asia, where his forces consisted of the armored cruisers Scharnhorst and Gneisenau as well as of the light cruisers Emden and Nürnberg.
At the outbreak of war in August 1914 Rear Admiral von Spee was at Ponape Island. Japan's belligerency made it clear to him that he could not remain in the Far Pacific and, after dispatching the Emden as commerce raider to the Indian Ocean, he set out for Chile. At the same time the light cruisers Dresden and Leipzig of the West Indies Squadron were ordered to join Spee off South America. Spee's armada on November 1 met a British force under Admiral Sir Christopher Cradock, consisting of the armored cruisers Good Hope and Monmouth, the light cruiser Glasgow, and the auxiliary cruiser Otranto ("the floating haystack"), near the Coronel Islands. Spee used his superior speed to demolish both the Good Hope and Monmouth at a range of eighteen kilometers; the two British cruisers managed to escape under cover of darkness. Britain lost 1,600 men including Cradock in what Sir John Fisher termed "the saddest naval action of the war."
After a brief stop at Valparaiso, Spee decided to make for home. He intended to stop at Port Stanley in the Falkland Islands on the way in order to destroy the enemy's wireless station there. In the meantime, a livid Admiral Fisher had dispatched a powerful squadron to the South Atlantic in order to annihilate Spee's forces: the battle cruisers Invincible and Inflexible, the armored cruisers Defence, Kent, Carnarvon, and Cornwall, and the light cruisers Bristol and Glasgow. The outcome was never in doubt: on December 8, 1914, both Scharnhorst and Gneisenau were destroyed at Port Stanley; Nürnberg and Leipzig were tracked down and demolished. Alone the Dresden made good its escape. Germany lost 2,200 officers and men including Spee and his two sons at the Falkland Islands. The kaiser was understandably "very depressed" over the loss of the cruisers. With the exception of the Black and Baltic seas and the Helgoland Bight, the German flag had been chased from the seas. The pocket battleship Admiral Graf Spee was christened in honor of the fallen admiral in 1934.