In 1834, Friedlieb Ferdinand Runge discovered phenol, also known as carbolic acid, which he derived in an impure form from coal tar. At that time, there was uncertainty between the substance of creosote – a chemical that had been used to treat wood used for railway ties and ships since it protected the wood from rotting – and carbolic acid. Upon hearing that creosote had been used for treating sewage, Lister began to test the efficacy of carbolic acid when applied directly to wounds.

He attended University College, London, one of only a few institutions which accepted Quakers at that time. He initially studied botany and obtained a bachelor of Arts degree in 1847. He registered as a medical student and graduated with honours as Bachelor of Medicine, subsequently entering the Royal College of Surgeons at the age of 26. In 1854, Lister became both first assistant to and friend of surgeon James Syme at the University of Edinburgh, Edinburgh Royal Infirmary in Scotland. There he joined the Royal Medical Society and presented two dissertations, in 1855 and 1871, which are still in the possession of the Society today.

Therefore, Lister tested the results of spraying instruments, the surgical incisions, and dressings with a solution of carbolic acid. Lister found that the solution swabbed on wounds remarkably reduced the incidence of gangrene. In August 1865, Lister applied a piece of lint dipped in carbolic acid solution onto the wound of a seven-year-old boy at Glasgow Infirmary, who had sustained a compound fracture after a cart wheel had passed over his leg. After four days, he renewed the pad and discovered that no infection had developed, and after a total of six weeks he was amazed to discover that the boy's bones had fused back together, without the danger of suppuration. He subsequently published his results in The Lancet in a series of six articles, running from March through July 1867.

Although Lister was so roundly honored in later life, his ideas about the transmission of infection and the use of antiseptics were widely criticized in his early career. In 1869, at the meetings of the British Association at Leeds, Lister's ideas were mocked; and again, in 1873, the medical journal The Lancet warned the entire medical profession against his progressive ideas. However, Lister did have some supporters including Marcus Beck, a consultant surgeon at University College Hospital, who not only practiced Lister's antiseptic technique, but included it in the next edition of one of the main surgical textbooks of the time.

In 1879, Listerine antiseptic (developed as a surgical antiseptic but nowadays best known as a mouthwash) was named after him. Microorganisms named in his honour include the pathogenic bacterial genus Listeria named by J. H. H. Pirie, typified by the food-borne pathogen Listeria monocytogenes, as well as the slime mould genus Listerella, first described by Eduard Adolf Wilhelm Jahn in 1906.

Lister moved from Scotland to King's College Hospital, in London. In 1881 he was elected President of the Clinical Society of London. He also developed a method of repairing kneecaps with metal wire and improved the technique of mastectomy.

Among foreign honours, he received the Pour le Mérite, one of Prussia's highest orders of merit. In 1889 he was elected as Foreign member of the Royal Swedish Academy of Sciences. Two postage stamps were issued in September 1965 to honour Lister for his pioneering work in antiseptic surgery.

Lister was President of the Royal Society between 1895 and 1900. Following his death, a memorial fund led to the founding of the Lister Medal, seen as the most prestigious prize that could be awarded to a surgeon.

A building at Glasgow Royal Infirmary which houses cytopathology, microbiology and pathology departments was named in his honour to recognise his work at the hospital. Lister Hospital in Stevenage, Hertfordshire, England is named in honour of Lister. The Discovery Expedition of 1901–04 named the highest point in the Royal Society Range, Antarctica, Mount Lister.

His discoveries were greatly praised and in 1883 Queen Victoria created him a Baronet, of Park Crescent in the Parish of St Marylebone in the County of Middlesex. In 1897 he was further honoured when Her Majesty raised him to the peerage as Baron Lister, of Lyme Regis in the County of Dorset. In the 1902 Coronation Honours list published on 26 June 1902 (the original day of King Edward VII´s coronation), Lord Lister was appointed a Privy Counsellor and one of the original members of the new Order of Merit (OM). He received the order from the King on 8 August 1902, and was sworn a member of the council at Buckingham Palace on 11 August 1902.

Lister is one of the two Surgeons in the United Kingdom who have the honour of having a public monument in London. Lister's stands in Portland Place; the other surgeon is John Hunter. There is a statue of Lister in Kelvingrove Park, Glasgow, celebrating his links with the city. In 1903, the British Institute of Preventative Medicine was renamed Lister Institute of Preventive Medicine in honour of Lister. The building, along with another adjacent building, forms what is now the Lister Hospital in Chelsea, which opened in 1985. In 2000, it became part of the HCA group of hospitals.

Lister died on 10 February 1912 at his country home (now known as Coast House) in Walmer, Kent at the age of 84. After a funeral Service at Westminster Abbey, he was buried at West Hampstead Cemetery, London in a plot to the south-east of central chapel. Both the baronetcy and barony became extinct on his death.

He is depicted in the Academy Award winning 1936 film, The Story of Louis Pasteur, by Halliwell Hobbes. In the film, Lister is one of the beleaguered microbiologist's most noted supporters in the otherwise largely hostile medical community and is the key speaker in the ceremony in his honour.