Educated at the University of Oxford, Panikkar read for the bar at the Middle Temple, London, before returning to India, where he then taught at Alīgarh and Calcutta universities. He turned to journalism in 1925 as editor of the Hindustan Times. He entered political life in the service of the Indian princes, becoming secretary to the chancellor of the Chamber of Princes (organization of rulers of the princely states). He also served as the foreign minister of the state of Patiala and as foreign minister and later as chief minister of the state of Bīkaner (1944–47). After India gained its independence, he was entrusted with greater responsibilities as ambassador to China (1948–52), Egypt (1952–53), and France (1956–59). Late in life, he returned to academia and was vice-chancellor of the University of Mysore at his death.

Panikkar's interest in European influence on Asia was reflected in his studies of the Portuguese and the Dutch in Malabar (in South India) and especially in his Asia and Western Dominance (1953). In Two Chinas (1955) revealed his sympathy with Communist China. He also wrote plays and novels.