Fraunhofer, whose family was in the optical trade, was born in Straubing (now in Germany); he was apprenticed to an optician in Munich after his parents died. He subsequently moved to the Utzschneider optical institute near Munich.

His great ambition was to perfect the achromatic lens, which John Dollond had developed a century earlier, and his scientific discoveries came as by-products of this work. The major difficulty was to measure the refractive indices of the different types of glass used in these lenses. In 1814, while testing prisms in order to determine these constants, he observed that the Sun's spectrum was covered with fine dark lines. He also noticed that these Fraunhofer lines occurred in the spectra of bright stars, but that their positions were different. The lines had been observed earlier by William Wollaston, but Fraunhofer studied them in detail, measuring the positions of 576 of them and giving the main ones letters A–G. He also found the lines to be present in spectra produced by reflection from a grating (1821–22), thus proving them to be a characteristic of the light, not the glass of the prism.

Fraunhofer had in his grasp the key to finding the composition of the stars, but this step was taken half a century later by Gustav Kirchhoff, who showed that lines in the solar spectrum resulted from characteristic absorption by elements in the atmosphere of the Sun.