Olah gained his PhD from the Technical University, Budapest, in 1949. He moved to Canada in 1956 following the Hungarian uprising and joined the staff of the Dow Chemical Company in Ontario. In 1964 he moved to America and in 1965 joined the faculty of the Case Western Reserve University, Cleveland, Ohio. In 1977 he moved to the University of Southern California, becoming director of the Loker Hydrocarbon Research Institute in 1991. Olah became a naturalized American citizen in 1970.

In certain chemical reactions involving hydrocarbons, extremely short-lived highly reactive positively charged carbon intermediates are often formed. These have a positive charge on the carbon atom and are known as ‘carbonium ions’ or ‘carbocations’. Because of their short lifetime, little had been established about these intermediates.

Olah, while working at Dow, discovered a way to preserve the intermediates and to allow their properties to be investigated. He found that solutions of a very strong acid, variously described as a ‘superacid’ or a ‘magic acid’, would preserve carbocations for months at a time and thus allow their structure to be determined with such techniques as nuclear magnetic resonance spectroscopy (NMR). Olah's superacids were formed by dissolving compounds such as antimony pentafluoride in water at low temperature. The result was an acid some 10¹⁸ times stronger than sulfuric acid. The stable carbocations formed in this way proved to be quite unusual, with structures quite unlike the more familiar tetrahedral forms. Olah's work quickly found important applications in industry; it has, for example, been widely used in synthesizing high-octane gasoline.

For his work on carbocations Olah was awarded the 1994 Nobel Prize for chemistry.