Born in Osceola County, Michigan, Moulton was educated in frontier schools, Albion College, and the University of Chicago where he obtained his PhD in 1899. He taught there until 1926, being made full professor in 1912. From 1927 to 1936 he worked in business before returning to science as executive secretary of the American Association for the Advancement of Science from 1936 to 1948.

Moulton is still remembered for his formulation of the planetismal theory of the origin of the planets in collaboration with Thomas Chamberlin in 1904. They suggested that a star had passed close to the Sun and that this resulted in the ejection of filaments of matter from both stars. The filaments cooled into tiny solid fragments, ‘planetesimals’. On collision the small particles stuck together (a process known as ‘accretion’). Thus over a very long period, grains became pebbles, then boulders, then even larger bodies. For larger bodies, the gravitational force of attraction would accelerate. In this way the protoplanets formed. This formation by accretion is still accepted although the stellar origin of the planetesimals has been largely dropped.