Ellis was the son of a sea captain, and he was educated at private schools in South London. After spending four years in Australia as a teacher, he returned to England in 1879 and entered St. Thomas' Hospital, London, in 1881 to study medicine. Ellis met George Bernard Shaw and Arthur Symons at meetings of the Fellowship of the New Life and became editor in 1887 of the “Mermaid Series of Old Dramatists,” designed to bring 17th-century dramas to a wider public. He also proposed and edited the “Contemporary Science Series,” which included his first book, The Criminal (1890). The researches begun for Man and Woman (1894) led to his major work, the seven-volume Studies in the Psychology of Sex (1897–1928). Publication of the first volume resulted in a trial during which the judge hearing the case called claims for the book's scientific value “a pretence, adopted for the purpose of selling a filthy publication.” Other volumes of the work were published in the United States and until 1935 were legally available only to the medical profession.

Ellis' Studies in the Psychology of Sex is a comprehensive and groundbreaking encyclopaedia of human sexual biology, behaviour, and attitudes. In separate volumes he examined such topics as homosexuality, masturbation, and the physiology of sexual behaviour. Ellis viewed sexual activity as the healthy and natural expression of love, and he sought to dissipate the fear and ignorance that characterized many people's attitudes toward human sexuality. His work helped to foster the open discussion of sexual problems, and he became known as a champion of women's rights and of sex education.