Thomas Hodgkin (1798-1866), who first described Hodgkin's lymphoma, was Alan Hodgkin's ancestor.

Hodgkin was born in Banbury, Oxfordshire, to George Hodgkin and Mary Wilson Hodgkin. His Father died of dysentery in Baghdad in 1918. His mother was remarried to Lionel Smith, with whom they lived. He was educated at The Downs School near Malvern, Gresham's School, and Trinity College, Cambridge. In 1930, he was the winner of a bronze medal in the Public Schools Essay Competition organised by the Royal Society for the Protection of Birds.

With Andrew Fielding Huxley, Hodgkin worked on experimental measurements and developed an action potential theory representing one of the earliest applications of a technique of electrophysiology, known as the "voltage clamp". The second critical element of their research was the use of the giant axon of the veined squid (Loligo forbesii), which enabled them to record ionic currents as they would not have been able to do in almost any other neuron, such cells being too small to study using the techniques of the time. The experiments started at the University of Cambridge, beginning in 1935 with frog sciatic nerve, and soon after they continued their work using squid giant axons at the Marine Biological Association Laboratory in Plymouth. In 1939, reporting work done in Plymouth, Alan Hodgkin and Andrew Huxley published a short paper in the journal Nature announcing their achievement of recording action potentials from inside a nerve fibre. Research was interrupted by World War II but after resuming their experimental work in Plymouth, the pair published their theory in 1952 in a series of publications.

During the Second World War, he volunteered on Aviation Medicine at Farnborough and was subsequently transferred to the Telecommunications Research Establishment (TRE) where he worked on the development of centimetric radar, including the design of the Village Inn AGLT airborne gun-laying system. Earlier, in March 1941, Hodgkin had flown on the test FLIGHT of a Bristol Blenheim fitted with the first airborne centimetric radar system. As the war ended in 1945, he joined the faculty of physiology department in Cambridge University. He was the Foulerton Professor of the Royal Society between 1951 and 1969. He served on the Royal Society Council from 1958 to 1960 and on the Medical Research Council from 1959 to 1963. He was foreign secretary of the Physiological Society from 1961 to 1967. He was appointed the John Humphrey Plummer Professor of Biophysics at Cambridge University in 1970. He also held additional administrative posts such as Chancellor, University of Leicester, from 1971 to 1984, and Master, Trinity College, Cambridge, from 1978 to 1985.

Alan Hodgkin married Marion Rous in 1944, whom he met while at Rockefeller Institute in 1938. She was the daughter of an American pathologist, Francis Peyton Rous, who won the 1966 Nobel Prize in Physiology or Medicine. She became Children's Book Editor at Macmillan Publishing Company and a successful Writer of children's literature, including Young Winter's Tales and Dead Indeed. They had three daughters, Sarah, Deborah, and Rachel, and a son Jonathan. Jonathan Hodgkin became a molecular Biologist at Cambridge University. Deborah Hodgkin is also a successful Psychologist.

Alan Lloyd Hodgkin, Andrew Fielding Huxley, and John Carew Eccles (for his research on synapses) were jointly awarded the 1963 Nobel Prize in Physiology or Medicine "for their discoveries concerning the ionic mechanisms involved in excitation and inhibition in the peripheral and central portions of the nerve cell membrane". Hodgkin was knighted (KCB) in 1972 and appointed to the Order of Merit in 1973. He was elected President of the Marine Biological Association of the United Kingdom in 1966. From 1970 to 1975 he was President of the Royal Society. The Royal Society awarded him its Royal Medal in 1958 and Copley Medal in 1965. He was also elected to the American Association for the Advancement of Science, American Philosophical Society, American Academy of Arts and Sciences, Royal Danish Academy of Sciences and Letters, Deutsche Akademie, and Indian National Science Academy. A portrait of Hodgkin by Michael Noakes hangs in Trinity College's collection.

With Huxley, he established the propagation mechanism of nerve impulse called "action potentials", the electrical impulses which enable the activity of an organism to be coordinated by a central nervous system. In addition Hodgkin and Huxley's findings led them to hypothesize the existence of ion channels on cell membranes, which were confirmed only decades later. Confirmation of ion channels came with the development of the patch clamp leading to a Nobel prize in 1991 for Erwin Neher and Bert Sakmann, and in 2003 for Roderick MacKinnon.