Educated for the ministry, Ladd was pastor of a Congregational church in Milwaukee, Wisconsin, for eight years before becoming professor of philosophy at Bowdoin College, Brunswick, Maine (1879–81). During those years, he began investigating the relationship between the nervous system and mental phenomena and introduced the first study of experimental psychology in the United States. From 1881 to 1905 he was a professor at Yale University, establishing one of the first American laboratories in experimental psychology. (Most scholars credit G. Stanley Hall (Hall, G. Stanley) with establishing the first American psychological laboratory at Johns Hopkins University in 1883.)

Ladd's main interest was in writing Elements of Physiological Psychology (1887), the first handbook of its kind in English. Because of its emphasis on neurophysiology, it long remained a standard work. In addition, Ladd's Psychology, Descriptive and Explanatory (1894) is important as a theoretical system of functional psychology, considering the human being as an organism with a mind purposefully solving problems and adapting to its environment.