Appleton was born in Bradford and studied physics at Cambridge University from 1910 to 1913. During World War I, while he was serving in the Royal Engineers, he developed the interest in radio that was to influence his later research. After the war he returned to Cambridge and worked in the Cavendish Laboratory from 1920. In 1924 he was appointed Wheatstone Professor of Experimental Physics at King's College, London.

Here, in his first year, he used a BBC transmitter to conduct a famous experiment, which established beyond doubt the presence of a layer of ionized gas in the upper atmosphere capable of reflecting radio waves. The existence of such a layer had been postulated by Oliver Heaviside and Arthur Kennelly to explain Marconi's transatlantic radio transmissions. By varying the frequency of a transmitter in Bournemouth and detecting the signal some 140 miles (225 km) away in Cambridge, he showed that interference occurred between direct (ground) waves and waves reflected off the layer (sky waves). Furthermore, the experiment measured the height of the layer, which he estimated at 60 miles (96 km). He proceeded to do theoretical work on the reflection or transmission of radio waves by an ionized layer and found, using further measurements, a second layer above the Heaviside–Kennelly layer. The Appleton layer undergoes daily fluctuations in ionization and he established a link between these variations and the occurrence of sunspots.

In 1936 he became the Jacksonian Professor of Natural Philosophy at Cambridge, and during the war years until 1949 he was secretary of the department of scientific and industrial research, in which period he led research into radar and the atomic bomb.

For his great achievements in ionospheric physics he was knighted in 1941 and in 1947 won the Nobel Prize for physics. From 1949 until his death he was principal of Edinburgh University.