Reichstein, the son of an engineer, was born in Wloclawek, Poland, and educated at the Federal Institute of Technology, Zurich, where he obtained his PhD in 1922. After some years in industry, Reichstein returned to work on the staff of the Institute in 1929. In 1938 he moved to the University of Basel, becoming in 1946 head of the Institute of Organic Chemistry, a position he held until his retirement in 1967.

In the 1930s Reichstein began to investigate the chemical role of the adrenal cortex. These are small glands, found on the kidneys, whose removal is invariably fatal. Beginning with a ton of beef adrenals he managed to reduce it to a mere ten grams of biologically active material.

From such samples he had, by 1946, isolated 29 different steroids, six of which he found would prolong the life of an animal with its adrenal gland removed. Of these, aldosterone, corticosterone, and hydrocortisone later proved the most active. Reichstein managed a partial synthesis of desoxycorticosterone, which for many years was the only corticoid that lent itself to large-scale production. At that time it was also the most effective treatment for Addison's disease.

Similar work was being done in America by Edward Kendall who shared with Reichstein the 1950 Nobel Prize for physiology or medicine together with Philip Hench.

In 1933 Reichstein succeeded in synthesizing ascorbic acid, vitamin C, at about the same time as Norman Haworth in England. He found a better technique for making the vitamin later that year, and this method is still used in commercial production.