Walter Woods Johnston was born in London, England, probably on 10 August 1839, the first child of Henrietta Charlotte Hatton and her husband, John Johnston, a merchant and stockbroker. Walter accompanied his parents and younger brother, Sydney, to New Zealand on the Prince of Wales, arriving at Wellington on 3 January 1843. A sister was born during the voyage, and a brother and two sisters were born in New Zealand.
Johnston was sent to France for his education. He then returned to Wellington where he worked in the mercantile business, Johnston and Company, established by his father. Father and son both joined the Wellington Militia in July 1861, and Walter was active in the regiment during the 1860s. From at least 1864 until the early 1870s he lived in Karori, probably at Homewood, which had been bought by his mother in 1852; he inherited the house and sold it to his brother Charles in 1888 after their father's death.
Johnston married Cecilia (Cissie) Augusta Goring in Wellington on 24 February 1868; they were to have four daughters and three sons. In March 1868 he became a partner in Levin and Company with William Levin and Charles Pharazyn, but when his father retired in 1878 he left this partnership to take over Johnston and Company with his brother Charles. It became a major importing and exporting company, acting as shipping and insurance agents, with branches throughout the lower North Island and in Blenheim.
Walter Johnston represented Manawatu in the House of Representatives from February 1871. He served as postmaster general and commissioner of telegraphs in Sir John Hall's ministry from March 1881 to April 1882. From then until October 1882 he served in the same positions under Frederick Whitaker, also holding the post of minister for public works until September 1883. During the Atkinson ministry he was minister for public works from September to November 1883, and a member of the Executive Council from September 1883 until he retired in June 1884 to pay greater attention to his business interests.
Castlepoint station in the Wairarapa was purchased by Johnston in 1876, extending the family's interest in farmland on the east coast. He inherited another property, Tamumu, in southern Hawke's Bay, from his father. His brother, Sydney, managed several family properties in Hawke's Bay from the 1860s, eventually inheriting and settling at Oruawharo.
In January 1885 Walter Johnston took his family to England for the children to be educated there under the guidance of Cecilia Johnston. He returned to New Zealand later that year, but visited England at least twice before bringing the family home in 1890. One of the return journeys followed Johnston's appointment in 1888 to the board of the Bank of New Zealand. In the same year he was appointed to a committee set up by bank shareholders to investigate and bring forward recommendations for placing it on a sounder basis. When the head office moved from London to Wellington in 1894 he became a shareholder director of the bank, and from January 1896 represented government interests on the board for three years.
Johnston had purchased a 1,200-acre estate near Awahuri in the Manawatu district in 1888. He eventually settled there in a large house, built in 1897–98, and named Highden after the Sussex home of his wife's grandfather, Sir Charles Forster Goring. He died of pneumonia on 31 August 1907 at his town residence in Hobson Street, Wellington, and was buried at Karori cemetery. Cecilia Johnston died in 1922.
The Johnston family were part of the economic and political élite of Wellington. Their home in Tinakori Road was adjacent to those of the Levins and Pharazyns, and included a large and well-patronised ballroom. Charles Johnston sat in the House of Representatives and the Legislative Council, and was mayor of Wellington in 1890. He married Alice Margaret Featherston, daughter of Isaac Earl Featherston, superintendent of the province of Wellington. One sister, Agnes, married Morgan Stanislaus Grace, later a member of the Legislative Council, and another, Jessie, married Westby Brook Perceval, a Christchurch MHR and later agent general for New Zealand in Britain.
The few reports of Walter Johnston's character highlight his integrity, geniality and unassuming demeanour. He was early reported to be an excellent, clear and concise speaker; and while he was described in March 1881 as the 'most indolent member in the House', he was judged the next year to be 'the most popular' and, it was generally thought, 'the ablest Minister of those in office'. Johnston was actively involved in community affairs, and was appointed to the board of governors of Wellington College in 1872. He was successful as a businessman and farmer, leaving an estate of almost £500,000.