Huggins built a private observatory at Tulse Hill, London, in 1856. From 1859 he was one of a number of astronomers who began to apply Robert Wilhelm Bunsen's and Gustav Robert Kirchhoff's discoveries in spectrum analysis (spectroscopy) to astronomy. Huggins's first spectroscopic observations, published in 1863, showed that stars are composed of the same elements that occur on the Sun and Earth. In 1864 the spectra he obtained of various nebulae established that they are composed mainly of incandescent gas (rather than aggregations of stars), thus settling a long debate over their composition. Soon afterward he obtained the spectra of several comets and was able to identify the presence of hydrocarbons in them. Huggins' most important innovation in the use of spectroscopy came in 1868, when he became the first to measure the radial velocity of a star by the Doppler shift of its spectral lines. This particular technical innovation would later assume profound importance in studies of the structure and evolution of the universe.

After 1875 Huggins worked mainly in collaboration with his wife, Margaret Huggins. He was knighted in 1897.