Wagner-Jauregg was born Julius Wagner on March 7, 1857, in the village of Wels, Austria. He was the oldest son of Ludovika Ranzoni and Adolf Johann Wagner, a government official. The family name became "Wagner von Jauregg" when Adolf Johann was raised to the nobility, but following the collapse of the Austro-Hungarian empire in 1918, the "von" was dropped.

While attending medical school at the University of Vienna, Wagner-Jauregg received thorough training in experimental biology and met the father of psychoanalysis, Sigmund Freud, who was studying at the Institute of General and Experimental Pathology. Despite Wagner-Jauregg's lack of interest in psychoanalysis, the two remained lifelong friends. In 1880 Wagner-Jauregg was awarded a medical degree for his thesis on the heart under conditions of acceleration.

Originally, Wagner-Jauregg hoped to practice general medicine, but when Vienna's two teaching hospitals turned him down, he reluctantly accepted a position as an assistant in the university's psychiatric...