Caspersson, who was born in Motala, Sweden, gained his MD from Stockholm University in 1936. He then joined the staff of the Nobel Institute serving as professor of medical cellular research and genetics from 1944 to 1977. In 1977 he was appointed professor and head of the medical cell research and genetics department at the Kungliga Karolinska Mediko-Kirurgiska Instituet in Stockholm.

In the late 1930s Caspersson spent a few years working on DNA. In 1936 with the Swiss chemist Rudolf Signer he made fundamental measurements of the molecule that suggested a molecular weight between 500,000 and a million, so showing the nucleic acids to be larger than protein molecules.

Further important data was collected by a photoelectric spectrophotometer developed by Caspersson. This allowed the movement of RNA in the cell to be followed by its characteristic absorption peak in the ultraviolet at 2600 angstroms and to establish that protein synthesis in the cell was associated with an abundance of RNA. Despite this Caspersson remained committed to the orthodox view that genes were proteins and believed nucleic acids to be a structure-determining supporting substance.

In 1970 Caspersson made a major breakthrough in the study of chromosomes. Before 1970 the only way to identify a chromosome was by its length. Caspersson argued that if genes differed in their concentration of the four bases (guanine, adenine, cytosine, and thymine), then they would be distributed differently in each chromosome. If a dye could be found that bound to one of the bases only, then a characteristic chromosomal pattern would be displayed. Precisely this happened when Caspersson found a quina-acrine mustard with an affinity for guanine. When illuminated with ultraviolet the now familiar pattern of bright and dark bands were displayed with startling clarity. Within a year Caspersson had used distinctive banding patterns to characterize all human chromosomes.