Staudinger studied chemistry at the universities of Darmstadt and Munich, and he received a Ph.D. from the University of Halle in 1903. He held academic posts at the universities of Strassburg (now Strasbourg) and Karlsruhe before joining the faculty at the Swiss Federal Institute of Technology in Zürich in 1912. He left the institute in 1926 to become a lecturer at the Albert Ludwig University of Freiburg im Breisgau, where in 1940 an Institute for Macromolecular Chemistry was established under his directorship. Staudinger's wife, the Latvian plant physiologist Magda Woit, was his coworker and coauthor. He retired in 1951.

Staudinger's first discovery was that of the highly reactive organic compounds known as ketenes. His work on polymers began with research he conducted for the German chemical firm BASF on the synthesis of isoprene (1910), the monomer of which natural rubber is composed. The prevalent belief at the time was that rubber and other polymers are composed of small molecules that are held together by “secondary” valences or other forces. In 1922 Staudinger and J. Fritschi proposed that polymers are actually giant molecules ( macromolecules) that are held together by normal covalent bonds, a concept that met with resistance from many authorities. Throughout the 1920s, the researches of Staudinger and others showed that small molecules form long, chainlike structures (polymers) by chemical interaction and not simply by physical aggregation. Staudinger showed that such linear molecules could be synthesized by a variety of processes and that they could maintain their identity even when subject to chemical modification.

Staudinger's pioneering work provided the theoretical basis for polymer chemistry and greatly contributed to the development of modern plastics. His researches on polymers eventually contributed to the development of molecular biology, which seeks to understand the structure of proteins and other macromolecules found in living organisms. Staudinger wrote numerous papers and books, including Arbeitserinnerungen (1961; “Working Memories”). Two of his students, Leopold Ružička (Ružička, Leopold) and Tadeus Reichstein (Reichstein, Tadeus), also won Nobel Prizes.