Forrester, born on a cattle ranch in Nebraska, attended a small country school before studying electrical engineering at the University of Nebraska. He went on to do graduate work at MIT on servomechanisms.

This led him, in 1945, to begin work on the design of a flight simulator for the US Navy. He soon discovered that, without high-speed servomechanisms, realistic systems could not be developed. At this point he was directed, in 1946, toward the possibility that digital computers could be used. Forrester set up a laboratory to tackle what became known as the ‘Whirlwind Project’. The Whirlwind, the largest computer of the time, became operational in the early 1950s. Problems, however, soon emerged. With several thousand vacuum tubes, each with a life of about 500 hours, regular breakdowns occurred.

Forrester's first advance was to increase the life of the tubes using new materials and a checking system. However, the main problem was with the machine's memory, which consisted of electrostatic storage tubes. These were expensive and unreliable, with each tube lasting no more than 1 month and costing $1000 to replace. Consequently, Forrester began to think about magnetic systems of data storage. He used magnetic ferrite rings on a grid of wires in a three-dimensional array. Each ring could be magnetized in one of two directions to represent the binary digits 1 or 0. The method was first employed in 1953, and gave an access time twice as fast as that using storage tubes.

The improvements were opportune. Following the political crises of the early cold-war years, the SAGE (Semi Automatic Ground Environment) project was initiated by the US Navy under the supervision of Forrester. Very reliable and very fast computers were needed to analyze air traffic, identify any likely threat, and guide interceptors to hostile planes or missiles. SAGE proved remarkably effective, coming into full operation in 1958 and remaining active until 1984.

Forrester left the project in 1956, moving to the MIT Sloan Management School as professor of management with the aim of developing computer systems capable of simulating economic and social systems. He explained his approach in a number of works, including Industrial Dynamics (1961), Principles of Systems (1968), and World Dynamics (1971).