Born in the Finnish capital of Helsinki, Granit qualified as a physician from the university there in 1927. He taught at the university from 1927 until 1940, serving as professor of physiology from 1935. In 1940 he moved to the Karolinska Institute, Stockholm, becoming professor of neurophysiology at the newly founded Medical Nobel Institute in 1946.

In a long career Granit has been a prolific writer on all aspects of the neurophysiology of vision. He demonstrated that light not only stimulates but can also inhibit impulses along the optic nerve. By attaching microelectrodes to individual cells in the retina he showed that color vision does not simply depend on three different types of receptor (cone) cells sensitive to different parts of the spectrum. Rather, some of the eye's nerve fibers are sensitive to the whole spectrum while others respond to a much narrower band and so are color specific.

Granit described his work in Sensory Mechanisms of the Retina (1947) and The Visual Pathway (1962); for such research he shared the 1967 Nobel Prize for physiology or medicine with George Wald and Haldan Hartline. Granit also did important work on the control of muscle spindles by the gamma fibers.