He was born in Berlin in 1908, and trained as an architect there at the Technical University, graduating 1931. In 1933, he won the Schinkel Prize for Architecture for a design for the Olympic Stadium in Berlin. However, with the rise to power of the Nazi Party, he was forced to leave the country, as was his uncle, physicist Max Born. Königsberger later illustrated Born's popularized physics text, The Restless Universe (published 1935). Königsberger spent the next six years in the Swiss Institute for the History of Egyptian Architecture in Cairo, where he gained his doctorate, and in 1939 was appointed chief architect and planner to Mysore State, India. His buildings during this period include the Indian Institute of Science (1943-44) and Victory Hall (1946) in Bangalore, and the town plan for Bhubaneswar. After Indian Independence he became he became director of housing for the Indian Ministry of Health from 1948 to 1951, working on resettling those displaced by partition.
In 1953 he moved to London and became head of the Department of Development and Tropical Studies at the Architectural Association, which later became the Development Planning Unit of University College, London, where he worked as a professor until his retirement in 1978.
Königsberger taught that town planners in the developing world should be prepared to dynamically adapt their plans, and involve local communities and techniques, as opposed to imposing a static master plan based on Western ideas – an approach he called Action Planning. He served as a senior adviser to the United Nations Economic and Social Council from the 1950s, and helped launch Habitat International in 1976, which he edited until 1978. His Manual of tropical housing and building was published in several languages and remains a standard course text in many parts of the world.
In 1989, Königsberger was one of the first recipients of the UN Habitat Scroll of Honour, the most prestigious award given by the United Nations in recognition of work carried out in the field of human settlements development. The same year, University College London established the Otto Königsberger Scholarship to enable young professionals from developing countries to study urban planning in the UK.