Jauregg was born Julius Wagner Ritter von Jauregg before the 1919 abolition of Austrian titles of nobility. He studied Medicine at the University of Vienna from 1874 to 1880, where he also studied with Salomon Stricker in the Institute of General and Experimental Pathology, obtaining his doctor's degree in 1880. From 1883 to 1887 he worked with Maximilian Leidesdorf in the Psychiatric Clinic, although his original training was not in the pathology of the nervous system. In 1889 he succeeded the famous Richard von Krafft-Ebing at the Neuro-Psychiatric Clinic of the University of Graz, and started his research on Goitre, cretinism and iodine. In 1893 he became Extraordinary Professor of Psychiatry and Nervous Diseases, and Director of the Clinic for Psychiatry and Nervous Diseases in Vienna, as successor to Theodor Meynert. Ten years later, in 1902, Wagner-Jauregg moved to the psychiatric clinic at the General Hospital and in 1911 he returned to his former post.
The main work pursued by Wagner-Jauregg throughout his life was related to the treatment of mental disease by inducing a fever. In 1887 he investigated the effects of febrile diseases on psychoses, making use of erisipela and tuberculin (discovered in 1890 by Robert Koch). Since these methods of treatment did not work very well, he tried in 1917 the inoculation of malaria parasites, which proved to be very successful in the case of dementia paralytica (also called general paresis of the insane), caused by neurosyphilis. This discovery earned him the Nobel Prize in Medicine in 1927. His main publication was a book titled Verhütung und Behandlung der progressiven Paralyse durch Impfmalaria (Prevention and treatment of progressive paralysis by malaria inoculation) in the Memorial Volume of the Handbuch der experimentellen Therapie, (1931).
Although many school, roads and hospitals are named after him in Austria, nowadays it is known that not long before his death he made an appliction to join the Nazi party (which, by the way, was not endorsed due to the fact that his first wife has been jewish).