Köppen was educated at the university in his native city of St. Petersburg and then at Heidelberg and Leipzig. Although he began his career in 1872 with the Russian meteorological service, he moved to Germany shortly afterward where, in 1875, he was appointed director of the meteorological research department of the German Naval Observatory at Hamburg, a post he retained until the end of World War I when he was succeeded by his son-in-law Alfred Wegener.

Köppen is mainly remembered today for the mathematical system of climatic classification he first formulated in 1900 and subsequently modified several times before 1936. He began by distinguishing between five broad climatic types – tropical rainy, dry, warm temperate, cold forest, and polar – symbolized by the letters A to E respectively. He further defined three patterns of precipitation: a climate with no dry period (f), with a dry summer period (s), and with a dry winter period (w). Four geographical zones were also introduced – steppe (S), desert (W), tundra (T), and perpetual frost (F). With such a technique some 60 climatic types are theoretically possible although Köppen argued that only 11 are in fact realized. Köppen further modified his scheme by introducing six temperature categories, which enabled him to make fine adjustments to his initial 11 classes. Though by no means the only such classification in existence, Köppen's system is still widely and conveniently used on climatic maps.

In his long career Köppen produced a number of substantial volumes, including a joint work with Wegener, Die Klimate der geologischen Vorzeit (1924; The Climate of Geological Prehistory), one of the founding texts of paleoclimatology. He also coedited, with Rudolph Geiger, a five-volume Handbuch der Klimatologie (Handbook of Climatology), begun in 1927 and nearing completion on his death in 1940.