London-born Jerne was educated at the University of Copenhagen, where he gained his doctorate in medicine in 1951 while working as a researcher at the Danish State Serum Institute (1943–54). After a period of research at the California Institute of Technology (1954–55), he was appointed chief medical officer with the World Health Organization in Geneva (1956–62) and also professor of biophysics at the University of Geneva (1960–62). He returned to America in 1962 to become head of the department of microbiology at the University of Pittsburgh. Subsequently he served for three years (1966–69) as director of the Paul Ehrlich Institute, Frankfurt, before leaving to found the Basel Institute for Immunology, where he served as director until 1980.

Jerne is noted for his theories concerning the diversity and production of antibodies. In 1955 he proposed the clonal selection theory of antibody formation to account for how the body's white blood cells (lymphocytes) are able, potentially, to manufacture such a huge range of different antibodies. He refuted the idea that antibodies are formed from scratch as and when required. Instead, Jerne proposed that different cells, each capable of producing a particular antibody, are present in the body from birth. When an agent such as a virus or bacteria enters the body, its chemical components (antigens) activate the relevant lymphocytes and cause them to divide repeatedly, thereby producing a clone of cells and enhancing manufacture of the appropriate antibody. The theory has since been shown to be correct.

The immense diversity of antibodies presents the problem of how the genome accommodates all the genetic information. Jerne was one of the first to advance the notion that some form of somatic mutation may be involved, an idea that was to lead to the theory of so-called ‘jumping genes’ and its demonstration in mouse cells by Jerne's colleague, Susumu Tonegawa.

Jerne also constructed a model of immune-system self-regulation based on the interactions of antibodies. Although a valuable contribution, the model does not anticipate the great complexity of control mechanisms revealed by recent discoveries of numerous chemical modulators of the immune system.

For his work, which helped to inspire a whole generation of immunologists, Jerne received the 1984 Nobel Prize for physiology or medicine. The prize was shared with César Milstein and Georges Köhler, another colleague of Jerne's working at Basel.