The son of a country doctor from Petilla in Spain, Ramón y Cajal embarked on medical studies only after being apprenticed first to a barber and then to a shoemaker. He obtained his license to practice in 1873, and after a year's service in the army in Cuba returned to Madrid and graduated as a doctor of medicine in 1877.

He is remembered for his research into the fine structure of nervous tissue. Before the development of the nerve-specific silver nitrate stain by the Italian cytologist Camillo Golgi in 1873, it was difficult (in neurohistological preparations) to distinguish true nervous elements from the surrounding supporting tissue (neuroglia). Ramón y Cajal refined Golgi's staining technique and subsequently used it to show the intricacy of the structure and connections of cells in the gray matter of the brain and spinal cord. He also used the stain to elucidate the fine structure of the retina of the eye, and the stain has proved useful in the diagnosis of brain tumors.

In 1906 Ramón y Cajal (together with Golgi) was awarded the Nobel Prize for physiology or medicine for establishing the neuron as the fundamental unit of the nervous system – a finding basic to the present understanding of the nerve impulse. He also advanced the neuron theory, which states that the nervous system is made up of numerous discrete cells and is not a system of fused cells.

Between 1884 and 1922 Ramón y Cajal held professorships successively at the universities of Valencia, Barcelona, and Madrid and in 1900 became director of the newly established Instituto Nacional de Higiene. In 1920 the Institute Cajal was commissioned by King Alfonso XIII of Spain and here Ramón y Cajal worked until his death.