Born in New York City, he was the son of Augustus G. Paine, Sr. (1839–1915) and Charlotte M. Bedell Paine (1840–1929). He was educated privately in the United States and Europe. He became president of the New York and Pennsylvania Company, which was based in 230 Park Avenue. The New York and Pennsylvania Company was one of the leading paper manufacturers in the country and a major supplier to the Curtis Publishing Company, the publisher of the Ladies' Home Journal, The Saturday Evening Post and others. He died in his home at 31 East 69th Street after a long illness at the age of 81, and was laid to rest in Woodlawn Cemetery in the Bronx.
In 1888 he married Maud Eustis Potts (April 3, 1865 – June 4, 1919), who converted from the Episcopal Church to Catholicism in 1913. Together they had five sons:
- Augustus Gibson Paine III
- George Eustis Paine (1894–1953), was chairman of the board of the New York and Pennsylvania Company until his death. He married Helen (Ellis) Paine (1895–1948), and their son was State Senator George Eustis Paine (1920–1991)
- Alexander Brooks Paine
- Hugh Eustis Paine
- Peter Standish Paine, who was president of the New York and Pennsylvania Company
All his sons married and had children themselves.
Four years after the passing of his first wife, he married Francisca Machado Warren (April 3, 1891 – February 8, 1981), daughter of Minton and Salomé Machado Warren of Cambridge, at St. John's Memorial Chapel in Cambridge. Together they had one daughter, Francisca Warren. Minton Warren (d. 1907) was a Latin professor at Johns Hopkins and later Harvard University, while Salomé Machado was of Cuban background.
Augustus G. Paine, Jr. was also the grandfather of the actress Molly McGreevey.
Paine was closely associated with the architect C. P. H. Gilbert, who received a number of commissions from him, such as his townhouse in New York's Upper East Side on 31 East 69th Street in 1917–18. The house was sold to the Austrian government in 1952, the Austrian Consulate General is located in it today. Augustus G. Paine, Jr. was also based in Willsboro, New York, due to his paper mill being located there. Gilbert received commissions from Paine to construct the Essex County Bank in 1921. In May 1930 Paine also donated a whole library to the town of Willsboro, in memory of his mother, in the sum of $150,000. Both the bank and the library were constructed by Gilbert in the Neoclassical style.
Paine also had Flat Rock Camp, his summer retreat on the shores of Lake Champlain in Willsboro, constructed for his family.
Paine was an avid hobby ornithologist. At the age of 19 or 20, together with Lewis B. Woodruff, he composed a list of birds of Central Park, counting over 100 species. This was regarded as the first official list of birds of Central Park, and was published in Forest and Stream on June 10, 1886. An article in The New Yorker on August 26, 1974, calls attention to this early list.
His collection of some 1,200 specimens were later donated by his family to the American Museum of Natural History under the name "Paine-Jordan bird collection". A copy of the original catalogue and documents relating to the gift were also given by the family to the museum archive.