Domagk, who was born in Lagow, now in Poland, graduated in medicine from the University of Kiel in 1921 and began teaching at the University of Greifswald and later at the University of Münster. At this time he carried out important researches into phagocytes – special cells that attack bacteria in the body.

He became interested in chemotherapy and in 1927 he was appointed director of research in experimental pathology and pathological anatomy at the giant chemical factory I. G. Farbenindustrie at Wuppertal-Elberfeld. Pursuing the ideas of Paul Ehrlich, Domagk tested new dyes produced by the Elberfeld chemists for their effect against various infections. In 1935 he reported the effectiveness of an orange-red dye called prontosil in combating streptococcal infections. For the first time a chemical had been found to be active in vivo against a common small bacterium. Earlier dyes used as drugs were active only against infections caused by much larger protozoa.

The work was followed up in research laboratories throughout the world – Alexander Fleming neglected penicillin to work on prontosil in the early 1930s – but the most significant ramifications were discovered by Daniele Bovet and his co-workers. Prontosil and the sulfa drugs that followed were effective in saving many lives, including those of Franklin D. Rooseveldt Jr., Winston Churchill, and Domagk's own daughter. In 1939 Domagk was offered the Nobel Prize for physiology or medicine. The Nazis forced him to withdraw his acceptance because Hitler was annoyed with the Nobel Committee for awarding the 1935 Peace Prize to a German, Carl von Ossietzky, whom Hitler had imprisoned. In 1947 Domagk was finally able to accept the prize. In his later years he undertook drug research into cancer and tuberculosis.