According to family information David Nathan was born in London, England, in 1816, the third son of Nathan Lion Nathan and his wife, Sarah Nathan. It is not known if the two Nathan families were related. After serving an apprenticeship in the wholesale clothing firm of his maternal uncle, Henry Moses, David Nathan emigrated to Australia to join members of his family there, arriving in Sydney aboard the Orient in December 1839. He had intended to go to Adelaide; however, on the promise of better economic prospects, he sailed for New Zealand on the Achilles, leaving Sydney for the Bay of Islands on 21 February 1840.
On arrival, Nathan immediately set up a store on the waterfront at Kororareka (Russell), stocked with goods he had brought from England. When it became clear that the capital would be transferred to Auckland, he decided to establish a business there. In 1841 he opened a store in a tent on the foreshore. He retained his store at Kororareka until 1842, and on one of his periodic visits there met, and on 31 October 1841 married, Rosetta Aarons, formerly Jacobs, the widow of Captain Michael Aarons. There were four daughters and two sons of this marriage, although two daughters died in infancy. Rosetta Nathan was to die in 1864, and on 22 January 1878, in London, Nathan married Edith Barrow Montefiore, the daughter of J. B. Montefiore, a merchant. They had no children.
By August 1841 Nathan had built a wooden store on the corner of Shortland Crescent and High Street. Trade prospered, and by 1853 a brick store and warehouse had been erected. He was granted an auctioneer's licence in 1842, and acted as a shipping agent, obtaining the agency of the Shaw Savill Shipping Company in 1858. He owned several small trading vessels and became a substantial property owner in the city.
After the reclamation of the Auckland foreshore, which was begun in 1859, Nathan leased land on the corner of Commerce and Customhouse streets. Here he erected a large gum store, a bond store and a tea warehouse. He retired from business in 1868, after establishing that year the firm of L. D. Nathan and Company for his sons, Laurence David and Nathan Alfred.
Nathan was highly regarded as a businessman and was a benefactor of many Auckland societies and institutions. He was a founder member of the Auckland Chamber of Commerce, established in 1856, and president in 1868. He was a trustee of the Auckland Savings Bank from 1864 to 1885 and vice president from 1878 to 1882, was an early commissioner for the port of Auckland, and served on the city council in 1854–55.
Nathan was deeply committed to the Jewish faith. His marriage to Rosetta Aarons was the first Jewish service held in New Zealand. The first regular services were held, from 1843, in a room set aside in his Shortland Crescent store. Through the efforts of Nathan and John Israel Montefiore, a Crown grant of land on the corner of Karangahape Road and Symonds Street was obtained in 1843 for a Jewish cemetery. Nathan served four terms as president of the Auckland Hebrew Congregation, between 1853 and 1883, and in 1884 laid the foundation stone of the synagogue on the corner of Princes and Bowen streets. David Nathan died on 23 August 1886 at Bella Vista, the home he had built in Waterloo Quadrant in 1863.