Lynen was educated at the university in his native city of Munich, where he obtained his doctorate under Heinrich Wieland in 1937. That same year he married Wieland's daughter. He was appointed to the faculty at Munich in 1942, being made professor of chemistry in 1947. In 1954 he became director of the Max Planck Institute for Cell Chemistry, Munich.

In 1950 Lynen showed that coenzyme A (described in 1947 by Fritz Lipmann) plays the central role in the breakdown of fats in the body. Fats are first broken down by the enzyme lipase into a number of free fatty acids. It had been shown in 1904 that these are then degraded two carbon atoms at a time. This is done by coenzyme A combining with the fatty acid and forming, after a number of intermediate steps, acetoacetyl coenzyme A at one end of the chain. This can now react with another molecule of coenzyme A causing a two-carbon fragment of acetyl coenzyme A to split off. The process can now be repeated with the result that a fatty acid chain of n carbon molecules is eventually reduced to half that number of acetyl coenzyme A molecules.

For this work on fatty acid metabolism and on cholesterol Lynen shared the 1964 Nobel Prize for physiology or medicine with Konrad Bloch.