Born in La Paz, Bolivia, as one of nine children, Otero came with her family to the U.S. when she was 12 years old. Although her initial studies in English literature were chosen with a career in academia in mind, it was her brother who convinced her that her future lay in helping others. She decided that if she was going to tackle poverty around the world she would study economics, and she also returned to Bolivia to improve her knowledge of the Latin American reality. She returned to the United States to complete graduate work at the Johns Hopkins School of Advanced International Studies, where she earned her Masters.In her early career, Otero became a program officer at the Inter-American Foundation and worked for five years at the Center for Population and Development Activities. Otero also worked as an economist for Latin America and the Caribbean in the Women in Development Office of USAID. In 1986, Otero joined Accion, one of the first micro lending organizations in the world, as country director in Honduras. She returned to the United States in 1989 to start and direct the Washington, D.C., office. In that position, she worked with the U.S. government and nonprofits to develop policies that helped families in the developing world earn money through small businesses. A typical microfinance program extends a small amount of credit, usually with no collateral, to people or organizations that would not normally qualify for loans. Otero was named Accion's vice president in 1994, and president and CEO of Accion International six years later. The nonprofit organization operates in 26 countries and is recognized as a global leader in microfinance and economic development. In 2000, President Clinton appointed Otero to the board of the United States Institute of Peace, where she served for eight years. In 2006 she was appointed by Secretary General Kofi Annan to the U.N. Advisors Group on Inclusive Financial Sectors. In June 2009, Otero was nominated to serve as under secretary for Democracy and Global Affairs, which made her the highest ranking Hispanic official at the State Department, and the first Latina under secretary in its history. In this position, Otero was charged with helping shape the State Department's positions on human rights, climate change, global health, refugees, trafficking in persons and women’s issues. She oversaw the Bureau of Democracy, Human Rights and Labor; the Bureau of Oceans, Environment, and Scientific Affairs; the Bureau of Population, Refugees and Migration; the Office to Monitor and Combat Trafficking in Persons; and the Office of the Science and Technology Advisor to the Secretary.