West Germany issued a postage stamp in 1954 on the 100th anniversary of the births of Paul Ehrlich (14 March 1854) and Emil von Behring (15 March 1854).

In the early 1870s, Ehrlich’s cousin Karl Weigert was the first person to stain bacteria with dyes and to introduce aniline pigments for histological studies and bacterial diagnostics. During his studies in Strassburg under the Anatomist Heinrich Wilhelm Waldeyer, Ehrlich continued the research started by his cousin in pigments and staining tissues for microscopic study. He spent his eighth university semester in Freiburg im Breisgau investigating primarily the red dye dahlia (monophenylrosanilin), giving rise to his first publication.

When a student in Breslau, Ehrlich was given an opportunity by the pathologist Julius Friedrich Cohnheim to conduct extensive research and was also introduced to Robert Koch, who was at the time a district physician in Wollstein, Posen Province. In his spare time, Koch had clarified the life cycle of the anthrax pathogen and had contacted Ferdinand Cohn, who was quickly convinced by Koch’s work and introduced him to his Breslau colleagues. From 30 April to 2 May 1876, Koch presented his investigations in Breslau, which the student Paul Ehrlich was able to attend

In 1878 he followed his dissertation supervisor Julius Friedrich Cohnheim to Leipzig, and that year obtained a doctorate with a dissertation entitled "Contributions to the Theory and Practice of Histological Staining" (Beiträge zur Theorie und Praxis der histologischen Färbung).

Starting in 1880, Ehrlich also studied red blood cells. He demonstrated the existence of nucleated red blood cells, which he subdivided into normoblasts, megaloblasts, microblasts and poikiloblasts; he had discovered the precursors of erythrocytes. Ehrlich thus also laid the basis for the analysis of anemias, after he had created the basis for systematizing leukemias with his investigation of white blood cells.

On 24 March 1882, Ehrlich was present when Robert Koch, working since 1880 at the Imperial Public Health Office (Kaiserliches Gesundheitsamt) in Berlin, presented the lecture in which he reported how he was able to identify the tuberculosis pathogen. Ehrlich later described this lecture as his “greatest experience in science.” The day after Koch’s lecture, Ehrlich had already made an improvement to Koch’s staining method, which Koch unreservedly welcomed. From this date on, the two men were bound in friendship.

He married Hedwig Pinkus (then aged 19) in 1883. The couple had two daughters, Stephanie and Marianne.

In 1885 Ehrlich‘s monograph "The Need of the Organism for Oxygen," (Das Sauerstoffbedürfnis des Organismus- Eine farbenanalytische Studie) appeared, which he also submitted as a habilitation thesis. In it he introduced the new Technology of in vivo staining. One of his findings was that pigments can only be easily assimilated by living organisms if they are in granular form. He injected the dyes alizarin blue and indophenol blue into laboratory animals and established after their death that various organs had been colored to different degrees. In organs with high oxygen saturation, indophenol was retained; in organs with medium saturation, indophenol was reduced, but not alizarin blue. And in areas with low oxygen saturation, both pigments were reduced. With this work, Ehrlich also formulated the conviction which guided his research: that all life processes can be traced to processes of physical chemistry occurring in the cell.

After completing his clinical education and habilitation at the prominent Charité medical school and teaching hospital in Berlin in 1886, Ehrlich traveled to Egypt and other countries in 1888 and 1889, in part to cure a case of tuberculosis which he had contracted in the laboratory. Upon his return he established a private medical practice and small laboratory in Berlin-Steglitz. In 1891, Robert Koch invited Ehrlich to join the staff at his Berlin Institute of Infectious Diseases, where in 1896 a new branch, the Institute for Serum Research and Testing (Institut für Serumforschung und Serumprüfung), was established for Ehrlich’s specialization. Ehrlich was named its founding Director.

In 1887 Ehrlich became an unsalaried lecturer in internal Medicine (Privatdozent für Innere Medizin) at Berlin University, and in 1890 took over the tuberculosis station at a public hospital in Berlin-Moabit at Koch’s request. This was where Koch’s hoped-for tuberculosis therapeutic agent tuberculin was under study; and Ehrlich had even injected himself with it. In the ensuing tuberculin scandal, Ehrlich tried to support Koch and stressed the value of tuberculin for diagnostic purposes. In 1891 Koch invited Ehrlich to work at the newly founded Institute of Infectious Diseases (Institut für Infektionskrankheiten – now the Robert Koch Institute) at Friedrich-Wilhelms-Universität (now Humboldt University) in Berlin. Koch was unable to give him any remuneration, but did offer him full access to laboratory staff, patients, chemicals and laboratory animals, which Ehrlich always remembered with gratitude.

After mid-1889, when Ehrlich was unemployed, he privately continued his research on methylene blue. His work on in vivo staining gave him the idea of using it therapeutically. Since the parasite family of Plasmodiidae – which includes the malaria pathogen – can be stained with methylene blue, he thought it could possibly be used in the treatment of malaria. In the case of two patients so treated at the city hospital in Berlin-Moabit, their fever indeed subsided and the malaria plasmodia disappeared from their blood. Ehrlich obtained methylene blue from the company Meister Lucius & Brüning AG (later renamed Hoechst AG), which started a long collaboration with this company.

Emil Behring had worked at the Berlin Institute of Infectious Diseases until 1893 on developing an antiserum for treating diphtheria and tetanus but with inconsistent results. Koch suggested that Behring and Ehrlich cooperate on the project. This joint work was successful to the extent that Ehrlich was quickly able to increase the level of immunity of the laboratory animals based on his experience with mice. Clinical tests with diphtheria serum early in 1894 were successful and in August the chemical company Hoechst started to market Behring’s “Diphtheria Remedy synthesized by Behring-Ehrlich.” The two discoverers had originally agreed to share any profits after the Hoechst share had been subtracted. Their contract was changed several times and finally Ehrlich was eventually pressured into accepting a profit share of only eight percent. Ehrlich resented what he considered as unfair treatment, and his relationship with Behring was thereafter problematic, a situation which later escalated over the issue of the valency of tetanus serum. Ehrlich recognized that the principle of serum therapy had been developed by Behring and Kitasato. But he was of the opinion that he had been the first to develop a serum which could also be used on humans, and that his role in developing the diphtheria serum had been insufficiently acknowledged. Behring, for his part, schemed against Ehrlich at the Prussian Ministry of Culture, and from 1900 on Ehrlich refused to collaborate with him. von Behring was the sole recipient of the first Nobel Prize in Medicine, in 1901, for contributions to research on diphtheria.

Since antiserums were an entirely new type of Medicine whose quality was highly variable, a government system was established to guarantee their safety and effectiveness. Beginning 1 April 1895, only government-approved serum could be sold in the German Reich. The testing station for diphtheria serum was provisionally housed at the Institute of Infectious Diseases. At the initiative of Friedrich Althoff, an Institute of Serum Research and Testing (Institut für Serumforschung und Serumprüfung) was established in 1896 in Berlin-Steglitz, with Paul Ehrlich as Director (which required him to cancel all his contracts with Hoechst). In this function and as honorary professor at Berliner University he had annual earnings of 6,000 marks, approximately the salary of a university professor. In addition to a testing department the institute also had a research department.

In 1899 his institute moved to Frankfurt am Main and was renamed the Institute of Experimental Therapy (Institut für experimentelle Therapie). One of his important collaborators there was Max Neisser. In 1904, Ehrlich received a full position of honorary professor from the University of Göttingen. In 1906 Ehrlich became the Director of the Georg Speyer House in Frankfurt, a private research foundation affiliated with his institute. Here he discovered in 1909 the first drug to be targeted against a specific pathogen: Salvarsan, a treatment for syphilis, which was at that time one of the most lethal and infectious diseases in Europe. Among the foreign guest Scientists working with Ehrlich were two Nobel Prize winners, Henry Hallett Dale and Paul Karrer. The institute was renamed Paul Ehrlich Institute in Ehrlich's honour in 1947.

In 1901, the Prussian Ministry of Finance criticized Ehrlich for exceeding his budget and as a consequence reduced his income. In this situation Althoff arranged a contact with Georg Speyer, a Jewish philanthropist and joint owner of the bank house Lazard Speyer-Ellissen. The cancerous disease of Princess Victoria, the widow of the German Emperor Friedrich II, had received much public attention and prompted a collection among wealthy Frankfurt citizens, including Speyer, in support of cancer research. Ehrlich had also received from the German Emperor Wilhelm II a personal request to devote all his Energy to cancer research. Such efforts led to the founding of a department for cancer research affiliated with the Institute of Experimental Therapy. The Chemist Gustav Embden, among others, worked there. Ehrlich informed his sponsors that cancer research meant basic research, and that a cure could not be expected soon.

As a model for experimental therapy Ehrlich used a guinea pig disease trypanosoma and tested out various chemical substances on laboratory animals. The trypanosomes could indeed be successfully killed with the dye trypan red. Beginning in 1906, he intensively investigated atoxyl and had it tested by Robert Koch along with other arsenic compounds during Koch's sleeping sickness expedition of 1906/07. Although the name literally means “nonpoisonous,” atoxyl does cause damage, especially to the optic nerve. Ehrlich elaborated the systematic testing of chemical compounds in the sense of screening as now practiced in the pharmaceutical industry. He discovered that Compound 418 - Arsenophenylglycine - had an impressive therapeutic effect and had it tested in Africa.

For providing a theoretical basis for immunology as well as for his work on serum valency, Ehrlich was awarded the Nobel Prize for Physiology or Medicine in 1908 together with Élie Metchnikoff. Metchnikoff, who had researched the cellular branch of immunity, Phagocytosis, at the Pasteur Institute had previously sharply attacked Ehrlich.

With the support of his assistant Sahachiro Hata Ehrlich discovered in 1909 that Compound 606, Arsphenamine effectively combatted "spirillum" spirochaetes bacteria, one of whose subspecies causes syphilis. The compound proved to have few side effects in human trials, and the spirochetes disappeared in seven syphilis patients after this treatment.

In 1910, a street was named after Ehrlich in Frankfurt-Sachsenhausen. During the Third Reich, Ehrlich's achievements were ignored while Emil Adolf von Behring was stylized as the ideal Aryan scientist, and the street named after Ehrlich was given another name. Shortly after the end of the war the name Paul-Ehrlich-Strasse was reinstated, and today numerous German cities have streets named after Paul Ehrlich.

Because some people died during the clinical testing, Ehrlich was accused of "stopping at nothing." In 1914, one of the most prominent accusers was convicted of Criminal libel at a trial for which Ehrlich was called to testify. Though Ehrlich was thereby exonerated, the ordeal threw him into a depression from which he never fully recovered.

In 1914 Ehrlich signed the controversial Manifesto of the Ninety-Three which was a defense of Germany’s World War I politics and militarism. On 17 August 1915 Ehrlich suffered a heart attack and died on 20 August in Bad Homburg vor der Höhe. Wilhelm II the German Emperor, wrote in a telegram of condolence, “I, along with the entire civilized world, mourn the death of this meritorious researcher for his great Service to medical science and suffering humanity; his life’s work ensures undying fame and the gratitude of both his contemporaries and posterity”.

The German Paul Ehrlich Institute, the successor to the Steglitz Institute for Serum Research and Serum Testing and the Frankfurt Royal Institute for Experimental Therapy, was named in 1947 after its first Director, Paul Ehrlich.

A crater of the moon was named after Paul Ehrlich in 1970.

The Anti-Defamation League awards a Paul Ehrlich–Günther K. Schwerin Human Rights Prize.

Ehrlich’s life and work was featured in the 1940 U.S. film Dr. Ehrlich's Magic Bullet with Edward G. Robinson in the title role. It focused on Salvarsan (arsphenamine, "compound 606"), his cure for syphilis. Since the Nazi government was opposed to this tribute to a Jewish scientist, attempts were made to keep the film a secret in Germany.