Michaelis was educated at the university in his native city of Berlin and at Freiburg. He worked in the laboratory of the Berlin Municipal Hospital from 1906 to 1922, when he took up the post of professor of biochemistry at the Nagoya Medical School, Japan. In 1926 Michaelis emigrated to America and after spending four years at Johns Hopkins moved to the Rockefeller Institute of Medical Research, where he remained until his retirement in 1940.

In 1913 Michaelis, in collaboration with L. M. Menten, formulated one of the earliest precise and quantitative laws applying to biochemical systems. They were trying to picture the relation between an enzyme and its substrate (the substance it catalyzes) and, in particular, how to predict and understand the reaction rate, that is, how much substrate is acted upon by an enzyme per unit time, and the basic factors that stimulate or inhibit this rate.

The kind of graph obtained when reaction rate is plotted against substrate concentration showed that additional substrate concentration sharply increases the reaction rate until a certain point is reached when the rate appears to become completely indifferent to the addition of any further amounts of substrate.

Michaelis saw this as indicating that the reaction between enzyme and substrate is a very specific one. In the early phase of the curve there was enzyme lacking substrate; as this was increased more and more enzyme came into play, increasing the reaction rate. Eventually, however, there will come a point when all the enzyme is being used and from that point the addition of any amount of substrate can have no effect on the reaction rate. This variation in rate was subsequently described by the Michaelis–Menten equation.

Michaelis's insight into the working of the enzyme–substrate complex was quite remarkable as no hard evidence for its existence was to emerge for a good many years, not in fact until Britton Chance was able to produce spectroscopic evidence in 1949.