Munenori Terashima studied rangaku and was appointed as a physician to Satsuma daimyō Shimazu Nariakira. In 1862, he was chosen as a member of the group of students selected by the Tokugawa bakufu to study at the University College London in Great Britain. He also visited France, the Netherlands, Belgium, Russia and Portugal. He returned to Japan in 1863, and participated in the defense of Satsuma during the Anglo-Satsuma War.
With the establishment of the Meiji government in 1868, he became a councilor and officer in charge of foreign affairs in the new government and was assigned to duty in Hyogo. Under the imperial envoy Higashikuze Michitomi, he had his first opportunity to deal directly with the foreign ministers as an official of the government. In the same year he was appointed a judge of Kanagawa Prefecture and a judge in the Bureau of Foreign Affairs.
In 1869 he was made vice-governor of the Foreign Office and later chief assistant of foreign affairs. In 1872 he was assigned a high post in the Japanese embassy in Britain and then promoted to the post of envoy extraordinary and minister plenipotentiary. In 1873 he became a councilor of state and foreign minister. He was transferred to the post of minister of education and later, after serving as chief of the Bureau of Legislation and president of the Genroin (Senate), in 1882, as envoy extraordinary and minister plenipotentiary, he was assigned to duty in the United States.
In 1884 he was assigned to a post in the Imperial Household Ministry, in 1886 became an adviser to the Privy Council, and in 1891 became president of the Privy Council.