Born at Ratibor (now Racibórz in Poland), Thiele studied mathematics at the University of Breslau but later turned to chemistry, receiving his doctorate from Halle in 1890. He taught at the University of Munich from 1893 to 1902, when he was appointed professor of chemistry at Strasbourg.

In 1899 Thiele proposed the idea of partial valence to deal with a problem that had been troubling theoretical chemists for some time. The structures produced by August Kekulé in 1858 and 1865 had revolutionized chemical thought but had also produced major problems. Double bonds in chemistry usually indicate reactivity but Kekulé's proposed structure for benzene, C₆H₆, contained three double bonds in its ring and yet benzene is comparatively unreactive. Thus it tends to undergo substitution reactions rather than addition reactions.

Thiele proposed that, when double and single bonds alternate, a pair of single bonds affect the intervening double bond in such a way as to give it some of the properties of a single bond. Given the ring structure of benzene, this occurs throughout the molecule and so neutralizes the activity of the double bonds. The same argument cannot be used with double bonds in a carbon chain for there the ends of the chain will be open to addition. Thiele's problem could not be completely solved until the development of quantum theory. Thiele's ideas are similar to the later concept of resonance structures – intermediate forms of molecules with bonding part way between conventional forms.