Kocher's father was Jakob Alexander Kocher (1814–1893), the sixth of seven children to Samuel Kocher (1771–1842), a carpenter, and Barbara Sutter (1772–1849). Jakob Alexander Kocher was a railway Engineer and he moved in 1845 to Burgdorf, Switzerland (near Bern), because of his job as regional Engineer of Emmental (Bezirksingenieur). He was named chief Engineer for street and water in the canton of Bern at the age of 34 years and he moved with his family to the capital, the city of Bern. In 1858 he left the states Service and managed several engineering projects around Bern.

Theodor Kocher's mother was Maria Kocher (née Wermuth) living from 1820 to 1900. She was a very religious woman and part of the Moravian Church; together with Jakob Alexander, she raised a family of five sons and one daughter (Theodor Kocher was the second son).

Theodor Kocher was born on 25 August 1841 in Bern and baptized in the local Bern Minster on 16 September 1841. Together with the family, he moved to Burgdorf in 1845 where he started school. Later his family moved back to Bern where he went to middle and high school (Realschule and Literaturgymnasium) where he was the first of his class. During high school, Theodor was interested in many subjects and was specifically drawn to art and classical philology but finally decided to become a Doctor.

He started his studies after obtaining the Swiss Matura in 1858 at the University of Bern where Anton Biermer and Hermann Askan Demme were teaching, two professors that impressed him most. He was a studious and dedicated student but still became a member of the Schweizerischer Zofingerverein, a Swiss fraternity. He obtained his doctorate in Bern in 1865 (March 1865) or 1866 with his dissertation about Behandlung der croupösen Pneumonie mit Veratrum-Präparaten (literal English translation: The treatment of croupous pneumonia with Veratrum preparations.) under professor Biermer with the predicate summa cum laude unamimiter.

Kocher was also a famous and loved Teacher. During nearly 100 semesters he taught his knowledge to about 10 000 students of the University of Bern. He was able to inspire students and taught them to think clearly and logically. Specifically, Kocher also taught a generation of Jewish-Russian students who could not study in Russia. This association with Russia has also led the Russian geographic society to name a volcano after him (in the area of Ujun-Choldongi). Among his many local and international students were Carl Arend (Bern), Oscar Bernhard (St. Moritz), Andrea Crotti (Ohio), Gustave Dardel (Bern), Carl Garré (Bonn), Gottlieb and Max Feurer (St. Gallen), Anton Fonio (Langnau), Walter Gröbly (Arbon), Carl Kaufmann (Zürich), Albert Kocher (Bern), Joseph Kopp (Luzern), Ernst Kummer (Geneva), Otto Lanz (Amsterdam), Edmond Lardy (Geneva) Jakob Lauper (Interlaken), Albert Lüthi (Thun), Hermann Matti (Bern), Charles Pettavel (Neuenburg), Paul Pfähler (Olten), Fritz de Quervain (La Chaux de Fonds / Basel / Bern), August Rickli (Langenthal), Ernst Rieben (Interlaken), August Rollier (Leysin), César Roux (Lausanne), Karl Schuler (Rorschach), Fritz Steinmann (Bern), Albert Vogel (Luzern), Hans Wildbolz (Bern) as well as the American neurosurgeon Harvey Cushing. Other notable students of his include Hayazo Ito (1865 - 1929) and S. Berezowsky which also spread his techniques in their respective home-countries (Japan and Russia).

Once returned to Bern, Kocher prepared for his habilitation and on 12 October 1867, he wrote a petition to the ministry of education to award him the venia docendi (Latin: to instruct) which was granted to him. He became assistant to Georg Lücke who left Bern in 1872 to become professor in Strasbourg. Kocher was hoping to get his position, but at the time it was customary to appoint German professors to positions at Swiss universities. Accordingly, the faculty suggested Franz König before Kocher to follow Lücke. However, the students and assistants as well as many doctors preferred Kocher and started a petition to the Bernese government to choose Kocher. Also the press was in favor of Kocher and several famous foreign Surgeons, such as Langenbeck from Berlin and Billroth from Vienna, wrote letters in support of Kocher. Under this public pressure, the Bernese government (Regierungsrat) chose Kocher as the successor of Lücke as Ordinary Professor of Surgery and Director of the University Surgical Clinic at the Inselspital on 16 March 1872, despite a different proposal by the faculty.

It is unclear whether Kocher directly knew Joseph Lister, who pioneered the antiseptic (using chemical means to kill bacteria) method, but Kocher was in correspondence with him. Kocher had recognized the importance of aseptic techniques early on, introducing them to his peers at a time when this was considered revolutionary. In a hospital report from 1868, he attributed the lower mortality directly to the "antiseptic Lister's wound bandaging method" and he could later as Director of the clinic order strict adherence to the antiseptic method. Bonjour (1981) describes how his assistants were worried about wound infection for fear of having to explain their failure to Kocher himself. Kocher made it a matter of principle to investigate the cause of every wound infection and remove every potential source of infection, he also banned visitors from his surgeries for this reason.

In 1869, he married Marie Witschi-Courant (1841–1921) or (1850 – 1925). She was the daughter of Johannes Witschi who was a merchant and she had three sons together with Kocher. The Kochers first lived at the Marktgasse in Bern and moved in 1875 to a bigger house in the Villette. The house became a place for friends, colleagues and guests to gather and many patients from Kocher's clinic were invited to dine at the Villette.

Kocher first attained international recognition with his method to reset a dislocated shoulder published in 1870. The new procedure was much less painful and safer than the traditionally used procedure and could be performed by a single physician. Kocher developed the procedure through his knowledge of anatomy. In the same period, Kocher also studied the phenomena of bullet wounds and how they can cause bone fractures. From these studies resulted one public lecture in 1874 Die Verbesserung der Geschosse vom Standpunkt der Humanitaet (English: The improvement of the bullets from the standpoint of humanity.) and an 1875 manuscript Ueber die Sprengwirkung der modernen Kriegsgewehrgeschosse (English: Over the explosive effect of modern war rifle bullets.) He showed that small caliber bullets were less harmful and recommended to use bullets with slower speed.

Thyroid surgery, which was mostly performed as treatment of goitre with a complete thyroidectomy when possible, was considered a risky procedure when Kocher started his work. Some estimates put the mortality of thyroidectomy as high as 75% in 1872. Indeed, the operation was believed to be one of the most dangerous operations and in France it was prohibited by the Academy of Medicine at the time. Through application of modern surgical methods, such as antiseptic wound treatment and minimizing blood loss, and the famous slow and precise style of Kocher, he managed to reduce the mortality of this operation from an already low 18% (compared to contemporary standards) to less than 0.5% by 1912. By then, Kocher had performed over 5000 thyroid excisions. The success of Kocher's methods, especially when compared to operations performed by Theodor Billroth who was also performing thyroidectomies at that time, was described by william Stewart Halsted as follows:

Kocher and others later discovered that the complete removal of the thyroid could lead to cretinism (termed cachexia strumipriva by Kocher) caused by a deficiency of thyroid hormones. The phenomena was reported to Kocher first in 1874 by the general practitioner August Fetscherin and later in 1882 by Jacques-Louis Reverdin together with his assistant Auguste Reverdin (1848-1908). Reverdin met Kocher on 7 September in Geneva at the international hygienic congress (internationaler Hygienekongress) and expressed his concerns about complete removal of the thyroid to Kocher. Kocher then tried to contact 77 of his 102 former patients and found signs of a physical and mental decay in those cases where he had removed the thyroid gland completely. Ironically, it was his precise surgery that allowed Kocher to remove the thyroid gland almost completely and led to the severe side effects of cretinism.

During his life, Kocher published 249 articles and books and supervised more than 130 doctoral candidates. He was rector of the university in 1878 and 1903. He was President of the Bernese and the Swiss Physicians association and co-founded the Swiss society for surgery in 1913 and became its first President.

At the time, Prague had the third largest university clinic in the German speaking world and it was a great honor for Kocher when he received a call as a professor to Prague in spring 1880. Many colleagues, especially international ones, urged Kocher to accept while Bernese doctors and colleagues begged him to stay. Kocher used this call, to demand certain improvements for the university clinic from the Bernese government. They accepted all his demands, the government promised him to begin building the new Inselspital building the next year, increased his credit for surgical equipment and books to 1000 franks and increased the number of beds for Kocher in the new Inselspital. Thus, Kocher decided to stay and many Bernese and Swiss students and professionals thanked him for it. He cited the affection of his students as one of his main reasons for staying. The university students organized a torchlight procession on 8 June 1880 in his honor.

A number of instruments (for Example the craniometer) and surgical techniques (for Example, the Kocher manoeuvre, and kocher incision) are named after him, as well as the Kocher-Debre-Semelaigne syndrome. The Kocher manoeuvre is still a standard practice in orthopaedics. Kocher is also credited for the invention in 1882 of the Kocher's Surgical Clamp, which he used to prevent blood loss during surgery.

Kocher came to the conclusion that a complete removal of the thyroid (as it was Common to perform at the time because the function of the thyroid was not yet clear) was not advisable, a finding that he made public on 4 April 1883 in a lecture to the German Society of Surgery and also published in 1883 under the title Ueber Kropfexstirpation und ihre Folgen (English: About Thyroidectomies and their consequences). Reverdin had already made his findings public on 13 September 1882 and published further articles on this topic in 1883; yet still Kocher never acknowledged Reverdin's priority in this discovery. At the time, the reactions to Kocher's lecture were mixed, some people asserted that goitre and cretinism were different stages of same disease and that cretinism would have occurred independently of the removal of the thyroid in the cases which Kocher described. In the long run however, these observations contributed to a more complete understanding of thyroid function and were one of the early hints of a connection between the thyroid and congenital cretinism. These findings finally enabled thyroid hormone replacement therapies for a variety of thyroid related diseases.

The Japanese surgeon Hayazo Ito came to Bern in 1896 in order to perform experimental research on epilepsy. Kocher was especially interested in the ICP during experimentally induced epilepsy and after Ito returned to Japan, he performed over 100 surgeries in epilepsy patients.

The American surgeon Harvey Cushing spent several months in the lab of Kocher in 1900, performing cerebral surgery and first encountering the Cushing reflex which describes the relationship between blood pressure and intracranial pressure. Kocher later also found that decompressive craniectomy was an effective method to lower ICP.

In 1904 or 1905 he built a private clinic called "Ulmenhof" which had space for 25 patients. Here Kocher catered to the wealthier patients, which in many cases were international. He also treated the wife of Lenin, Nadezhda Krupskaya and operated on her in Bern (in 1913).

The call for an ordinary professorship at the University of Bern at the age of 30 was the first big career step for Theodor Kocher. In the 45 years he served as professor at the university, he oversaw the re-building of the famous Bernese Inselspital, published 249 scholarly articles and books, trained numerous medical doctors and treated thousands of patients. He made major contributions to the fields of applied surgery, neurosurgery and, especially, thyroid surgery and endocrinology. For his work he received, among other honors, the 1909 Nobel Prize in Physiology or Medicine. According to Asher, the field of surgery has transformed radically during the time of Theodore Kocher and later generations will build on the foundations created by Kocher – if a Future Historian wanted to describe the state of surgery at the beginning of the 20th century, he only need mention Kocher's Text-Book of Operative Surgery.

On the evening of 23 July 1917, he was called into the Inselspital for an emergency. Kocher executed the surgery but afterwards felt unwell and went to bed, working on scientific notes. He then fell unconscious and died on 27 July 1917.

Kocher's name is living on with the Theodor Kocher Institute, the Kochergasse and the Kocher Park in Bern. In the Inselspital, there is a bust of Kocher, created by Karl Hänny in 1927. In the Kocher Park there is another bust, created by Max Fueter. In the Manchuria, a volcano is named after Kocher.

In 1950, the Swiss Historian Edgar Bonjour (1989–1991) who was married to Dora Kocher wrote a 136-page monograph on Kocher's life that was extended again in 1981.

Three main factors contributed to Kocher's success as a surgeon, according to Bonjour (1981). The first factor was his consequent implementation of antiseptic wound treatment which prevented infection and later death of the patients. The second factor, according to Erich Hintzsche, was his monitoring of the anesthesia where he used special masks and later used local anesthesia for goitre surgery which decreased or removed the dangers of anesthesia. As a third factor, Hintzsche mentions the minimal blood loss which Kocher achieved. Even the smallest source of blood during surgery was precisely controlled and inhibited by Kocher, initially because he thought that decomposing blood would constitute an infection risk for the patient.