Born at the rural family manor of Lyngsbækgård on Mols near Ebeltoft, Otto Mønsted became a wholesaler of butter, grain and feed in the town of Aarhus in 1865 after some trading experience in Grenå, Roskilde and Copenhagen. In 1876, he founded a large business exporting butter in hermetically sealed containers to places like England, China and Africa. Although the butter company was successful, he diversified into manufacturing margarine, and in 1883 opened the first margarine factory in Denmark.
He followed five years later with a factory in Godley, near Manchester, England, and in 1894 he built a vast margarine works in Southall, London. Mønsteds butter company was renamed to Otto Mønsted Aarhus in 1909 - usually just shortened to OMA - and the OMA margarine brand became very familiar in Denmark, as he introduced innovative marketing techniques for his time. He also tried to gain a foothold on the Russian market with margarine, but lost a great deal of money as a consequence of the first world war and the Russian revolution.
He led the establishing of the first local telephone company of Århus Telefonselskab and donated a large sum of money to the establishment of Aarhus Theatre and financed the interior artistic decorations as well. Mønsteds' contributions was not limited to the town of Aarhus though and he was made a Knight of the Dannebrog. He built himself a villa in 1896-97, Kristianiagade 5 in Copenhagen, designed by the architect Vilhelm Dahlerup.
The building is now the Russian Embassy. When Mønsted died, he was one of Denmark's richest men. The Otto Mønsted Foundation was created, which contributes to the development of the Danish business community.
In 1956, the Otto Mønsteds College in Valby was endowed.