Fitch was born to Joseph Fitch and Sarah Shaler in Windsor, Connecticut, on January 21, 1743, on a farm that is part of present-day South Windsor, Connecticut. He received little formal schooling and eventually apprenticed himself to a clockmaker. During his apprenticeship, Fitch was not allowed to learn or even observe watchmaking (he later taught himself how to repair clocks and watches).
He married Lucy Roberts December 29, 1767. Following this apprenticeship in Hartford, he opened an unsuccessful brass foundry in East Windsor, Connecticut, and then a brass and silversmith business in Trenton, New Jersey, which succeeded for eight years but was destroyed by British troops during the American Revolution.
He served briefly during the Revolution, mostly as a gunsmith working for the New Jersey militia. He left his unit after a dispute over a promotion but continued his work repairing and refitting arms in Trenton. In the fall of 1777, Fitch provided beer and tobacco to the Continental Army in Philadelphia. During the following winter and spring, he provided beer, rum and other supplies to troops at Valley Forge.
In 1780, he began work as a surveyor in Kentucky where he recorded a land claim of 1,600 acres (6.5 km2) for himself. In the spring of 1782, while surveying in the Northwest Territory, he was captured by Indians and turned over to the British, who eventually released him.
By 1785, Fitch was done with surveying and settled in Warminster, Pennsylvania, where he began working on his ideas for a steam-powered boat. Unable to raise funds from the Continental Congress, he persuaded various state legislatures to award him a 14-year monopoly for steamboat traffic on their inland waterways. With these monopolies, he was able to secure funding from businessmen and professional citizens in Philadelphia.
Fitch had seen a drawing of an early British Newcomen atmospheric engine in an encyclopedia, but Newcomen engines were huge structures designed to pump water out of mines. He had somehow heard about the more efficient steam engine developed by James Watt in Scotland in the late 1770s, but there was not a single Watt engine in America at that time, nor would there be for many years (Fulton's exported model in his 1807 steamboat, Clermont, would be one of the first) because Britain would not allow the export of any new technology to its former colony. As a result, Fitch attempted to design his own version of a steam engine. He moved to Philadelphia and engaged the clockmaker and inventor Henry Voigt to help him build a working model and place it on a boat.
The first successful trial run of his steamboat Perseverance was made on the Delaware River on August 22, 1787, in the presence of delegates from the Constitutional Convention. It was propelled by a bank of oars on either side of the boat. During the next few years, Fitch and Voigt worked to develop better designs, and in June 1790 launched a 60-foot (18 m) boat powered by a steam engine driving several stern-mounted oars. These oars paddled in a manner similar to the motion of a swimming duck's feet. With this boat, he carried up to 30 paying passengers on numerous round-trip voyages between Philadelphia and Burlington, New Jersey during the summer of 1790. Estimates of miles traveled that summer range from 1,300 to 3,000, and Fitch claimed that the boat often went for 500 miles without mechanical problems. Estimated speeds were of a minimum 6 miles per hour under unfavorable conditions, to a maximum of 7 or 8 miles per hour.