Virtanen was educated at the university in his native city of Helsinki, where he obtained his PhD in 1919, and at the universities of Zurich and Stockholm. He worked from 1921 to 1931 as director of the Finnish Cooperative Dairies Association Laboratory and from 1924 at the University of Helsinki where, in 1931, he became director of the Biochemical Institute.

In 1945 Virtanen was awarded the Nobel Prize for chemistry for his method of fodder preservation. This AIV method, as it became known, named for his initials, was designed to stop the loss of nitrogenous material in storage. By storing green fodder in an acid medium he hoped to prevent spoilage and still retain nutritious fodder. After much experimentation he finally found that a mixture of hydrochloric and sulfuric acid was adequate as long as its strength was kept within certain precise limits. Specifically, this demanded a pH of about four. In 1929 Virtanen found that cows fed on silage produced by his method gave milk indistinguishable in taste from that of cows fed on normal fodder. Further, it was just as rich in both vitamin A and C.