Avery was born in Halifax, the capital of Nova Scotia, Canada. Educated at Colgate University, he received his AB in 1900 and his medical degree in 1904. After a time at the Hoagland Laboratory, New York, as a lecturer and researcher in bacteriology, he joined the Rockefeller Institute Hospital (1913–48). While investigating the pneumococcus bacteria responsible for causing lobar pneumonia, Avery found that the bacteria produced soluble substances, derived from the cell wall and identified as polysaccharides, that were specific in their chemical composition for each different type of pneumococcus. This work provided a basis for establishing the immunologic identity of a cell in biochemical terms.

In 1932 Avery started work on the phenomenon of transformation in bacteria. It had already been shown that heat-killed cells of a virulent pneumococcus strain could transform a living avirulent strain into the virulent form. In 1944 Avery and his colleagues Maclyn McCarty and Colin MacLeod, extracted and purified the transforming substance and showed it to be deoxyribonucleic acid (DNA). Previously it had been thought that protein was the hereditary material and thus Avery's work was an important step toward the eventual discovery, made nine years later by James Watson and Francis Crick, of the chemical basis of heredity.