Neher was born in Landsberg, Germany. After attending the Technical University of Munich and the University of Wisconsin, he joined the Max Planck Institute of Psychiatry, Munich, in 1970, as a research associate. In 1972 he moved to the Max Planck Institute for Biophysical Chemistry in Göttingen, being appointed research director in 1983. Two periods of research in America took him to Yale University (1975–76) and the California Institute of Technology (1988–89).

Neher is best known for his studies of the minute channels in the membranes of living cells that allow ions to pass in and out of the cell. In the mid-1970s, working in collaboration with Bert Sakmann, Neher developed the so-called `patch-clamp technique’ to detect the tiny electrical currents produced by the passage of ions through the membrane. Detection posed considerable technical challenges, given that the currents associated with each channel are of the order of 10^–12 ampere, and the channels have a diameter comparable to the diameter of the ions.

The technique involved applying the tip of a saline-containing micropipette to the cell's membrane and applying suction to form a seal around the patch of membrane. The currents produced by the ions passing through the ion channel was monitored using a special amplifier. The technique had the great advantage of eliminating electrical noise generated by other parts of the membrane, which hitherto had obscured signals from any one channel.

Using their technique, Neher and Sakmann were able to demonstrate that the ion channels are either ‘open’ or ‘shut’, i.e., producing an ‘all or nothing’ signal. Also, each channel is specific to a particular type of ion.

The patch-clamp technique has proved itself to be both sensitive and elegant, and has found application in many fields of basic and applied research. Ion channels are involved in a range of biological processes, such as the generation of nerve impulses, the fertilization of eggs, and the regulation of the heartbeat. The way in which their behavior is altered by disease or drugs can have far-reaching implications.

This crucial development in cellular research techniques earned Neher and Sakmann the 1991 Nobel Prize for physiology or medicine.