Lindblad was born in Örebro, Sweden, and educated at the University of Uppsala where he obtained his PhD in 1920. After two years in America at the Lick and Mount Wilson observatories in California he returned to Uppsala. He was appointed in 1927 to the directorship of the Stockholm Observatory while serving at the same time as professor of astronomy at Stockholm University. He was followed by his son, Per Olof, who became director at the observatory in 1967.

It was Lindblad who in 1926 put forward the fundamental idea of the rotation of our Galaxy. This was based partly on the discovery by Jacobus Kapteyn in 1904 of the two main streams of stars that appear to be moving in opposite directions and also on studies of the motions of stars with high radial velocity. Lindblad realized that these and other phenomena only made sense on the assumption of galactic rotation. Confirmation of Lindblad's conjecture was soon provided by Jan Oort.

Lindblad also studied the structure of the Galaxy and suggested a mechanism by which its spiral structure is sustained.