Karetai was the son of Te Ihutakura and Kakatuaheka, and thus was descended from the tribal ancestor Tahu Potiki through Te Ruahikihiki on his father's side and through Tu-te-ahunga on his mother's side. He was born in the late eighteenth century. He was the superior Ngai Tahu leader at Otakou, on the Otago Peninsula, by the time the Wellers' whaling station was founded there in 1831 and was ironically nicknamed Jacky White by the whalers, probably because 'his face was so completely covered in tattooing that it looked bluish-black'. Besides pre-eminence in the Otakou district, Karetai enjoyed hereditary rights at Banks Peninsula, through his mother.
Karetai was less assertive by nature than his contemporaries Tuhawaiki and Taiaroa, who attracted attention among Europeans through their pursuit of European accomplishments. But among Maori Karetai's reputation was secure. He was distinguished in the three requisites for chiefly mana – genealogy, war, and political acumen. His record in armed combat was beyond reproach and his dealings with Europeans were astute and correct, and without the indiscretions of his more flamboyant cousin Taiaroa. At Foveaux Strait in 1826 he befriended the sealer John Boultbee and urged him to settle at Otakou. Boultbee remarked on his 'lively and friendly disposition' and interest in learning to write.
In 1833 Karetai shared with Tuhawaiki the command of the first successful counter-attack against Te Rauparaha of Ngati Toa at Cook Strait. In the final battle near the Marlborough Sounds, where Te Rauparaha was nearly captured, Karetai was wounded in the face and knee; he lost his left eye and was left with a permanent limp. He does not appear to have taken part in Taiaroa's expedition of 1834 against Te Rauparaha but he is said to have accompanied the party which defeated Te Puoho's raiding party at Tuturau in 1836–37.
Karetai visited Sydney on a number of occasions. Once, probably in 1834, he and one of his wives were invited to stay with the Reverend Samuel Marsden, who gave them Christian instruction. While there they contracted measles, which led to a serious epidemic when they returned to Otakou in 1835.
Karetai engaged in a number of land sales. In 1838 he joined with Tuhawaiki and other leaders in Sydney in the sale of large blocks of land in southern New Zealand. In 1839 he sold land between the Waikouaiti and Pleasant rivers in East Otago to John Jones's agent. Part of the price consisted of sealing boats, which were popular with leaders who wished to conduct coastal trade.
In late 1839 Karetai commanded four of the twenty boats in Tuhawaiki's final expedition against Te Rauparaha. Stopping at Wairewa (Lake Forsyth), the expedition took prisoner a boat's crew from George Hempleman's whaling station at Peraki Bay and killed a Ngati Toa member. Karetai then entered Peraki with his four boats. A fight was narrowly averted when Captain William Hay, aboard the Sydney vessel Siren, attempted to apprehend the man responsible for the killing but later decided to let the matter drop. The chiefs then demanded of Hempleman a large boat in payment for the place, and Karetai with the others signed Hempleman's 'deed'; the deed defined boundaries which Hempleman subsequently expanded when he submitted this land claim for Crown investigation.
In January 1840, after this expedition returned to the south without fighting Te Rauparaha, Karetai accompanied Tuhawaiki and other southern leaders to Sydney on the Success at the invitation of John Jones. William Hobson had just sailed for New Zealand to attempt a treaty of sovereignty with Maori leaders, and Governor George Gipps, hearing of the presence of these leaders in Sydney, invited them to Government House to sign a treaty with him, which their tribes would later ratify in Hobson's presence. Karetai, Tukawa and Kaikoreare declined this invitation. But Tuhawaiki, Taiaroa and five others saw Gipps on 14 February and accepted 10 sovereigns each from him, and then on Jones's advice declined to sign his treaty. On 15 February 1840 Karetai and the seven other southern leaders, Tuhawaiki, Kaikoreare, Tukawa, Taiaroa, Te Whaikai Pokene, Tohowaki and Topi Patuki, signed a parchment in favour of W. C. Wentworth and John Jones purporting to convey the whole of the South Island and Stewart Island. For his part Karetai received £20 and the promise of a £10 annuity. His signature on the parchment is a full and heavy moko, with the area of the left cheek and eye missing. With his uncle Korako, Karetai signed the Treaty of Waitangi for Major Thomas Bunbury at Otakou on 13 June 1840.
Karetai later signed several official land sale deeds: the Otago deed on 31 July 1844; Kemp's deed on 12 June 1848, the receipt for the second instalment at Akaroa on 22 February 1849 and the final instalment at Otakou on 17 December 1849; and the Murihiku deed on 17 August 1853, with the receipt for the Otago instalment on 3 October 1853.
At the Otago purchase in 1844 Karetai strongly urged mutual respect among Maori and European for each other's land rights. But after the payment Karetai complained, mistakenly, of having been paid short for his share. When Tuhawaiki upbraided Karetai for telling lies the two leaders came to blows. Karetai's son threatened Tuhawaiki with a tomahawk, which was wrested from him by a European. In October 1844 Tuhawaiki drowned at sea.
In November 1852 the young missionary James West Stack found Karetai living in a one-roomed weatherboard house on the hill at Otakou with a young wife and child, his adult son Timoti living nearby. Stack together with his travelling companion Tamihana Te Rauparaha stayed with Karetai for three days, confined to the house by bad weather. Stack found his visit to the 'old chief' a memorable one, and praised 'the sincerity of his Christian faith'. He wrote, 'I found old Karetai a particularly interesting man to talk to.'
In September 1857 Karetai joined with other prominent Ngai Tahu leaders in signing a loyal petition to the Queen organised by Matiaha Tiramorehu of Moeraki. They sent it to Walter Mantell in London, complaining of their neglect by the past and present governors of New Zealand, and asking that Mantell (Te Tipa) be sent back to be their governor 'in this island of the Greenstone Lake'.
Karetai died at Otakou on 30 May 1860 and received a Christian burial. His monument stands in the Maori cemetery. He was said to be 79 years of age. He had eight wives, Pohata, Hinehou, Pitoko, Te Koara, Wahine Ororaki, Mahaka, Hinepakia, and Te Horo, and as many as 10 children.
In a critical period for his tribe under the dual impact of European settlement and epidemic disease, Karetai's modest and dignified leadership provided much-needed stability. He accepted the new world while retaining his place in the old. This policy established by Karetai became a lasting tradition at Otakou.