Haag was born in Erlangen, in the Kingdom of Bavaria, and was trained in the Academy of Fine Arts Nuremberg and at Munich. He first practised as an illustrator and as a painter in oils of portraits and architectural subjects; but in 1847 he settled in England, after which he devoted himself to watercolours, and in 1850 was elected an associate of the Royal Society of Painters in Water Colours before becoming a full member in 1853. He travelled a lot, especially in the East, and made a considerable reputation by his firmly drawn and carefully elaborated paintings of Eastern subjects. Some of his depictions of the Middle East are in the Israel Museum's collection.
Towards the end of his professional career, Carl Haag left England and returned to the newly united German Empire, where he died in Oberwesel.