Chu was born in Hunan, China, but his parents were members of the Nationalist Party and the family fled to Taiwan in 1949 for political reasons. After graduating in physics from Chengkung University, Chu moved to America in 1963 and gained his PhD in 1968 from the University of California, San Diego. After spending some time working for the company AT & T, Chu entered academic life, first at Cleveland State University, and since 1979 as professor of physics at the University of Houston.

Much of Chu's work has been in the field of superconductivity. A major breakthrough had been achieved in 1986 when Alex Muller had discovered some materials that become superconductive below the relatively high critical temperature of 35 K (–238°C). This temperature was still too low to be economic. The vital temperature was 77.4 K (–195.8°C) – the temperature below which nitrogen becomes liquid. The aim was to find materials that could be cooled to a superconducting state using relatively cheap liquid nitrogen, rather than the extremely expensive liquid helium (b.p. –268.9°C). Chu was determined that his Houston laboratory would be the first to find a superconductor with a critical temperature above 77.4 K.

The superconductor found by Muller was a ceramic material composed of barium, lanthanum, and copper oxide (Ba–La–CuO). Chu began by reproducing Muller's work. He next developed new methods of synthesis for this type of compound and began first to vary the ratio of elements in the compound. Initial results obtained by reducing the amount of copper were encouraging, but could not be repeated. However, at high pressures of 10,000 atmospheres it was possible to increase the critical temperature to about 40 K. Changing the proportions of the elements could raise the temperature to 52.5 K, but this was still at high pressures.

The original Muller compound contained three metals in the ratio 2:1:4. Many researchers concentrated on substituting other metals in the same ratio. Copper seemed to play a special bonding role and was judged by Chu to be indispensable. Chu decided to replace the lanthanum with other related lanthanoid elements. One he chose to work with was yttrium (Y). Finally, in January 1987, just a year after Muller's breakthrough, Chu found that the critical temperature of Y_{1 . 2}Ba_{0 . 8}CuO₄ was 93 K and that the effect was stable and permanent.