Hensen was born in Schleswig, Germany, and studied science and medicine at the universities of Würzburg, Berlin, and Kiel, graduating from the latter in 1858. He remained at Kiel to work in the physiology department and later served as professor of physiology (1871–1911).

Hensen worked on comparative studies of vision and hearing but also discovered, independently of Claude Bernard, the compound glycogen. He is better remembered however for his work on plankton. He introduced the term plankton in 1887 to describe the minute drifting animals and plants in the oceans. Moreover he advanced beyond the descriptive stage and introduced numerical methods into marine biology, notably in constructing the Hensen net, a simple loop net designed to filter a square meter of water. This enabled the number of plankton in a known area of water to be counted. Hensen tested his equipment in the North Sea and the Baltic in 1885.

Satisfied with his techniques he made a more ambitious trip in 1889 covering more than 15,000 miles of the Atlantic. One of his more surprising results was the greater concentration of plankton in temperate than in tropical waters.