Dana was born at Utica in New York State and educated at Yale (1830–33) where he became interested in geology. He worked initially as assistant to Benjamin Silliman and published, in 1837, A System of Mineralogy, one of the major textbooks on the subject.

He sailed as geologist and naturalist on the Wilkes expedition (1838–42) visiting the Antarctic and Pacific. On his return, Dana published a series of research reports on the voyage during the period 1844–54, which established his reputation as an important scientist. These included Zoophytes (1846), Geology (1849), and Crustacea (1852).

In 1847 Dana formulated his geosynclinal theory of the origin of mountains. He introduced the term geosyncline to refer to troughs or dips in the Earth's surface that became filled with sediment. These huge deposits of sediment could then, Dana proposed, be compressed and folded into mountain chains.

He was appointed to the chair of natural history at Yale in 1856 and in 1864 to the chair of geology and mineralogy where he remained until his retirement in 1890. He published several important books while at Yale, including his most notable textbook, Manual of Geology (1863), and the synthesis of his work on coral reefs in Corals and Coral Islands (1872). In agreement with Charles Darwin's ideas, published in 1842, Dana argued that coral islands are the result of subsidence of the island together with the upward growth of corals.