Hofmann was born in Giessen. He originally planned to study law at college, but after attending chemistry lectures by Justus von Liebig, he became interested in chemistry.In 1841 he received his doctorate. His dissertation was on coal tar, the precursor to aniline, which in turn could be derived from phenal and ammonia. Likewise, his many hundreds of papers were on coal tars and their derivatives. In 1843, after his father's death, Hofmann joined Liebig as an assistant. He taught for a few months at the University of Bonn in 1845 and then moved on to England, where he was appointed a professor of the Royal College of Chemistry. He remained there until 1863, when he returned to Berlin, publishing a textbook entitled An Introduction to Modern Chemistry in 1865.

Hofmann was more of an analyst than a bench chemist--that is, he worked more comfortably analyzing and interpreting data than physically manipulating substances in experimentation. For that reason, he searched out talented assistants to carry out the laboratory techniques. Many of his assistants and students, among them Frederick Abel, William Crookes, William Henry Perkin, William Nicholson (1753-1815), John Newlands (1837-1898), Peter Griess (1829-1888), C. A. Martius, and Jacob Volhard (1834-1910), went on to develop synthetic dyes and establish the synthetic dye industries in England and Germany.

Hofmann spent many years studying nitrogen compounds like ammonia, which led to his development of polyammonias, now called triamines and diamines. Following the path started by his students, he also began to research synthetic dyes. In 1858 he reacted carbon tetrachloride with aniline which contained the impurities orthotoluidine and paratoluidine and formed a dye called rosaniline. Hofmann also succeeded in producing aniline blue, or diphenylaniline, by replacing hydrogen in rosaniline with aniline. He patented his Hofmann's violet in 1863 and successfully marketed it. He also developed new production techniques for synthetic dyes; the "Hofmann degradation" was widely used to produce amines. Hofmann also investigated methyl aldehyde, now called formaldehyde.

Hofmann was a founder of the German Chemical Society and was instrumental in standardizing the nomenclature for alkanes and alkane derivatives. He died in Berlin in 1892.