Lederberg studied under Tatum at Yale (Ph.D., 1948) and taught at the University of Wisconsin (1947–59), where he established a department of medical genetics. In 1959 he joined the faculty of the Stanford Medical School, serving as director of the Kennedy Laboratories of Molecular Medicine there from 1962 to 1978, when he moved to New York City to become president of Rockefeller University. He held that post until 1990.

With Tatum he published “Gene Recombination in Escherichia coli” (1946), in which he reported that the mixing of two different strains of a bacterium resulted in genetic recombination between them and thus to a new, crossbred strain of the bacterium. Scientists had previously thought that bacteria only reproduced asexually—i.e., by cells splitting in two; Lederberg and Tatum showed that they could also reproduce sexually, and that bacterial genetic systems are similar to those of multicellular organisms.

While biologists who had not previously believed that “sex” existed in bacteria such as E. coli were still confirming Lederberg's discovery, he and his student Norton D. Zinder (Zinder, Norton David) reported another and equally surprising finding. In the paper “Genetic Exchange in Salmonella” (1952), they revealed that certain bacteriophages (bacteria-infecting viruses) were capable of carrying a bacterial gene from one bacterium to another, a phenomenon they termed transduction.

Lederberg's discoveries greatly increased the utility of bacteria as a tool in genetics research, and it soon became as important as the fruit fly Drosophila and the bread mold Neurospora. Moreover, his discovery of transduction provided the first hint that genes could be inserted into cells. The realization that the genetic material of living things could be directly manipulated eventually bore fruit in the field of genetic engineering, or recombinant DNA technology.