As an undergraduate, he attended the University of Helsinki, where he studied Finno-Ugric languages under Eemil Nestor Setälä. He was later attracted to the study of Altaic languages and went to Mongolia to study the Mongolian language at the suggestion of Otto Donner. He later became professor extraordinarius in Altaic languages at the same university.
During his expeditions in Mongolia, Ramstedt become a personal friend to highly educated Buryat Mongol Agvan Dorzhiev who acted as full representative of 13th Dalai Lama, Thubten Gyatso and was a full member in Tibetan Government, Kashag as Minister of Treasures (Finances). Ramstedt was one of the few foreigners who was invited to visit Lhasa, but unfortunately the coming events prevented his visit to Tibet. In 1911 the Mongolian delegation in St.Petersburg asked Ramstedt to act as mediator with Imperial Russian government to support the Mongolian Independence from Chinese Empire. He managed to confirm the Russians of the good will of Mongolian representatives and they supplied 15.000 modern rifles to the Mongolians to start the uprising against the Chinese rule in Mongolia.
In 1912, when Ramstedt was in Urga, Mongolia, the Mongol leaders; Da Lama, Chin Van Khanddorj, and Haisan-Gung asked him to help with the negotiations with the Russian representatives which did not accept the Mongol idea to unify Urjanhai, Mongolia (including also Inner Mongolia) and Buryat Mongolia to one modern Mongol State. Ramstedt advised the Mongol leaders to seek also international recognition for their state from other states, particularly Japan, Britain, Germany, France and United States. Ramstedt did not know anything of the secret agreement between Russia and Japan where Inner Mongolia was promised by both States to be kept as a part of China.
Following the independence of Finland in 1917, he became Finland's first envoy to Japan, as a Chargé d'affaires, from 1920 to 1929, during which he was a frequent guest lecturer at Tokyo Imperial University, where he influenced Kunio Yanagita, Izuru Shimura, Kyōsuke Kindaichi, and Shimpei Ogura. He acquired command of the Japanese language remarkably quickly.