Born in the Argentinian capital, Houssay was the founder and director of the Buenos Aires Institute of Biology and Experimental Medicine. He was also professor of physiology at Buenos Aires from 1910 until 1965, apart from the years 1943–55 when he was relieved of his post by the regime of Juan Perón.

Houssay's work centered upon the role of the pituitary gland in regulating the amount of sugar in the blood, as well as its effects in aggravating or inducing diabetes. Working initially with dogs, he found that diabetic sufferers could have their condition eased by extraction of the pituitary gland, since its hormonal effect is to increase the amount of sugar in the blood and thus counter the influence of insulin. Deliberate injection of pituitary extracts actually increases the severity of diabetes or may induce it when the condition did not previously exist. He was also able to isolate at least one of the pituitary's hormones that had the reverse effect to insulin. Houssay's work on hormones led to his award, in 1947, of the Nobel Prize for physiology or medicine, which he shared with Carl and Gerty Cori. He was the author of Human Physiology (1951).