Monteiro de Castro studied humanities, philosophy and theology in the Archdiocese of Braga. He was ordained to the priesthood by Archbishop António Bento Júnior on 9 July 1961 after which he studied at the Pontifical Gregorian University in Rome, where he earned a doctorate in canon law in June 1967. During this time he received practical training and obtained a diploma in diplomacy from the elite Pontifical Ecclesiastical Academy. In February 1969, he became advocate in the Sacred Roman Rota.
He entered the diplomatic service of the Holy See in 1967. He was created Chaplain of His Holiness on 1 July 1968. He served as secretary of the nunciatures in Panamá from 1967 to 1969, Guatemala from 1969 until 1972, Việt Nam and Cambodia from 1972 until 1975, Australia from 1975 to 1978 and México from 1978 to June 1981. He was upgraded to Prelate of honour of His Holiness on 1 July 1981. He returned to Rome where he worked in the Second Section of the Secretariat of State from June to November 1981. The decision was taken to appoint him counselor of the nunciature in Belgium in 1981 where he served until 1985. In 1985 he was awarded Knight Grand Cross of the Order of Infante Dom Henrique, granted by Prime Minister Mário Soares.
In 1985 he was appointed archbishop and pro-nuncio to the countries in the West Indies that have diplomatic relations with the Holy See, including The Bahamas, Barbados, Belize, Dominica, Grenada, Jamaica, Saint Lucia and Trinidad and Tobago, and apostolic delegate for the other territories, such as the Turks and Caicos Islands and the Netherlands Antilles. He was consecrated by Cardinal Secretary of State Agostino Casaroli. Two years later, when Antigua and Barbuda had established diplomatic relations with the Holy See, he became pro-nuncio there too instead of apostolic delegate. In 1998 he was transferred to South Africa, with responsibility also for some neighbouring countries. And in 2000 he became Apostolic Nuncio to Spain and Andorra. As such, he met with José Luis Rodríguez Zapatero, to reduce the tension between the Spanish Government and the Church.
In 2003 he was decorated with the Knight Grand Cross of the Military Order of Christ, granted by the minister of Foreign Affairs.
On 3 July 2009, Pope Benedict appointed him secretary of the Congregation for Bishops, replacing Archbishop Francesco Monterisi who was the same day appointed as archpriest of the Papal Basilica of Saint Paul Outside the Walls. The Congregation that considers candidates for appointing bishops for Latin Rite non-missionary dioceses, except in cases that fall within the competence the Section for Public Affairs of the Secretariat of State (appointments that require some form of consultation with governments) or the Congregation for the Oriental Churches (in the Middle East and Greece).
Traditionally the Secretary of the Congregation for Bishops is also Secretary of the College of Cardinals, and Monteiro de Castro was formally appointed to this role on 21 October 2009. He is also one of the consultors of the Congregation for the Doctrine of the Faith.
On 5 January 2012 Archbishop Monteiro de Castro was appointed Major Penitentiary of the Apostolic Penitentiary replacing Cardinal Baldelli who had reached the retirement age of 75 in 2010. It is his job as major penitentiary to ensure the absolution of excommunications latæ sententiæ reserved to the Holy See, the dispensation of sacramental impediments reserved to the Holy See, and the issuance and governance of indulgences.
It was announced on 6 January 2012 that Archbishop Monteiro de Castro would be created a cardinal on 18 February by Pope Benedict XVI. He was duly created Cardinal-Deacon of San Domenico di Guzman on that day. On 21 April 2012 Cardinal Monteiro de Castro was appointed a member of the Pontifical Council for the Pastoral Care of Migrants and Itinerants, Congregation for the Causes of Saints and the Congregation for Bishops. He will hold these memberships until he is 80.
He was one of the cardinal electors who participated in the 2013 papal conclave that elected Pope Francis.
He will have rights to vote in a papal conclave until his 80th birthday in 2018.
Monsignor Monteiro de Castro has been cited in the press for his views on homosexual relationships. He insisted that same-sex unions could not be regarded as marriages, but he implied that they were at least worthy of compassion.