Born to German parents, Potthast left school as a teenager to work in the lithography firm of Ehrgott and Krebs. Previously, he had studied at the McMicken School with Thomas Noble, and between trips abroad, he continued to attend Noble's classes until 1887. Potthast left Ehrgott and Krebs in 1879 for the Strobridge Lithography Company. By 1882, however, he had saved enough money to go to Europe, where he studied at the Royal Academies of Antwerp and Munich and in Paris at the Acad‚mie Julian. After several years he returned to Cincinnati as head designer for Strobridge. Over the next decade, he made several trips to France, spending time at Grez-sur-Loing and Fontainebleau.
Potthast left Cincinnati permanently in 1895, opening a studio in New York City. There he prepared illustrations for periodicals such as The Century, Harper's, and Scribner's. On the strength of his genre paintings, he won the Academy's Clarke Prize in 1899 and was elected an Associate. He became a member of the Society of American Artists in 1902. Late in life, Potthast developed a speciality of coast scenes, which he painted during summers spent in Gloucester and Provincetown, MA and Ogunquit, ME. In 1910 he also made a trip to the Grand Canyon with artists Thomas Moran, Elliot Daingerfield, De Witt Parshall, and Frederick Ballard Williams. During World War I, he painted large floating targets for naval maneuvers. Potthast died of a heart attack at his easel in the Gainsborough Studios.