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Florey was born and educated in Adelaide and graduated in medicine from the university there in 1921. Early in 1922 he arrived in Oxford, on a Rhodes scholarship and studied physiology for two years under Charles Sherrington. He then moved to Cambridge University where he studied the various roles and behavior of cells and their constituents for his PhD degree.

In 1931 he was appointed professor of pathology at Sheffield University and for four years studied mucus secretions and the role of the cell in inflammation. He was especially interested in the chemical action of lysozyme (an enzyme discovered in 1921 by Alexander Fleming), which is an antibacterial agent that catalyzes the destruction of the cell walls of certain bacteria.

In 1935 Florey became head of the Sir William Dunn School of Pathology at Oxford. Here, along with the biochemist Ernst Chain, he took up Fleming's neglected studies on Penicillium mold and in 1939 they succeeded in extracting an impure form of the highly reactive compound penicillin. Florey's work on penicillin was a natural extension of his earlier antibacterial work, inspired by the necessity for efficient antibiotics in wartime. Work continued over the next few years on the purification of the drug. The main problem was that vast quantities of mold needed to be grown for just a few milligrams of penicillin. In wartime Britain the necessary financial backing for these innovative biochemical engineering developments could not be obtained, and permission was given to use companies in America for the manufacture of the drug. The considerable problems of large-scale production were overcome and from 1943 onward sufficient penicillin was available to treat war casualties as well as cases of pneumonia, meningitis, syphilis, and diphtheria.

Florey is important as a scientist who took Fleming's discovery and made it into a workable treatment for disease – 15 years after the original discovery. He shared the Nobel Prize for physiology or medicine with Chain and Fleming in 1945. He had been knighted in 1944, and in 1965 he was raised to the British peerage.