Huggins, the son of a London silkmercer, attended school for a short period before being educated privately. After a few years in business he retired to devote himself exclusively to the study of science. His first interest was in microscopy but he became absorbed in the work of Gustav Kirchhoff and Robert Bunsen on spectroscopy and the solar spectrum and decided that he would try to do the same with the stars. He equipped himself with the best of instruments including a superb 8-inch (20-cm) glass from Alvan Clark. He spent some time making maps of the terrestrial elements before moving to the stars, collaborating with William Miller, professor of chemistry at King's College, London. He then began the first major intensive spectral investigation of the stars, which lasted until he was 84 years old, when he found that he could no longer see clearly enough. In later life he was also helped by his wife, Margaret, whom he married in 1875.

Huggins's first observations, published in 1863, showed the stars to be composed of known elements occurring on the Earth and in the Sun. His next great discovery came when he obtained the spectra of those nebula that earlier astronomers had failed to resolve into stars. His excitement is apparent in his report: “I looked into the spectroscope. No spectrum such as I expected! A single bright line only! … The riddle of the nebula was solved … Not an aggregation of stars, but a luminous gas.” He quickly examined the spectra of over 50 nebulae and found that a third were gaseous. In the same year he obtained the spectra of a comet and found that it contained hydrocarbons. In 1866 he showed that a nova was rich in hydrogen. He also discovered previously unidentified bright emission lines in the spectra of certain nebulae and attributed them to a new element ‘nebulium’. The true explanation for these forbidden lines was not provided until the next century, by Ira Bowen.

In 1868 Huggins successfully employed a use of spectroscopy that has had a more profound impact on cosmology than anything else. It had been shown by Christian Doppler and Armand Fizeau that the light waves of an object leaving an observer would have a lower frequency, and the frequency of an object approaching an observer should increase. In spectral terms this means that the spectra of the former object should be shifted toward the red and the latter toward the blue. In 1868 Huggins examined the spectrum of Sirius and found a noticeable red shift. As the degree of the shift is proportional to the velocity, Huggins was able to calculate that the speed of recession of Sirius was about 25 miles (40 km) per second. He quickly determined the velocity of many other stars. He and Lady Huggins published their spectral work in its entirety as the Atlas of Representative Stellar Spectra in 1899. Huggins had tried to photograph Sirius but was only successful in 1876 by which time the gelatine dry plate had been developed.

Huggins was knighted in 1897, and was president of the Royal Society from 1900 to 1905.