Schönbein was born at Metzingen in Germany. After studying at the universities of Tübingen and Erlangen, he took up an appointment at the University of Basel in 1828, staying there for the rest of his life.

Many stories relate how he discovered nitrocellulose (guncotton) in 1846. In all of them a bottle in which he had been distilling nitric and sulfuric acids broke on the floor of the kitchen. In some stories, as he was forbidden by his wife to experiment in the kitchen, he is supposed to have panicked and wiped the mess up with his wife's cotton apron. In others he is unable to find a mop and uses the nearest thing to hand, his wife's cotton apron. Put to dry over the stove it flared up without smoke: Schönbein had discovered the first new explosive since gunpowder. (He was nearly anticipated in his discovery of guncotton: Théophile Pelouze had obtained an inflammable material in 1838 by treating cotton with nitric acid, but he failed to follow it up.)

Schönbein saw what a valuable commodity he had and quickly secured the appropriate patents on it. He gave exclusive rights of manufacture to John Hall and Sons in Britain but, unfortunately, their factory at Faversham blew up in July 1847, killing 21 workers. Similar lethal explosions occurred in France, Russia, and Germany. Its properties were too valuable to allow chemists to abandon it altogether: it was smokeless and four times more powerful than gunpowder; properly controlled it would make an ideal propellant. It was finally modified by Frederick Abel and James Dewar later in the century in the forms of Poudre B and cordite.

In 1840 Schönbein discovered ozone, the allotropic form of oxygen. Investigating the curious smell that seemed to linger around electrical equipment, he traced it to a gas (O₃) that he named after the Greek word for smell (ozon).