Krauss was born in Vienna out of wedlock to Clementine Krauss, then a 15-year-old dancer in the Vienna Imperial Opera Ballet, later a leading actress and operetta singer, niece of the prominent nineteenth-century operatic soprano Gabrielle Krauss. His natural father, Chevalier Hector Baltazzi (1851-1916), came from a family of wealthy Phanariot bankers resident in Vienna. Baltazzi's older sister Helene was married to Baron Albin Vetsera and was the mother of Baroness Mary Vetsera, who was accordingly Clemens Krauss' first cousin.
Krauss sang in the Hofkapelle (Imperial Choir) as a Vienna Choir Boy. He graduated from the Vienna Conservatory in 1912, after studying composition with Hermann Graedener and theory with Richard Heuberger there. He was then appointed chorus master in the Brno Theater (1912-1913), where he made his conducting debut in 1913. The famous Romanian soprano Viorica Ursuleac, who often sang under him, became his second wife.
Krauss made the rounds of regional centers, conducting in Riga (1913-1914), Nuremberg (1915) and Stettin (1916-1921) (formerly part of East Prussia in Germany; now part of Poland). The latter appointment gave him ample opportunity to travel to Berlin to hear Arthur Nikisch conduct the Berlin Philharmonic, a major influence. He then returned to Austria as director of the opera and symphony concerts in Graz. In 1922, he joined the conducting staff of the Vienna State Opera and teacher of the conducting class in the Vienna Singakademie. He conducted the Vienna Tonkünstler concerts from 1923 to 1927, and was Intendant of the opera in Frankfurt and director of the Museum concerts there from 1924 to 1929.
After the Munich opera house had been destroyed by Allied bombing, Krauss returned to conduct the Vienna Philharmonic in 1944-45 until it ceased activities shortly before the end of World War II. After the war, Allied officials investigated his career and forbade him from appearing in public until 1947, when it emerged that he had helped Jews escape from the Third Reich. Krauss then resumed conducting many of the Vienna Philharmonic's concerts, including its famous annual New Year's Day pops concerts featuring Johann and Josef Strauss waltzes, overtures and polkas, many of which were recorded for Decca along with other studio recordings of mostly Johann, Josef and Richard Strauss.
He made relatively few recordings; but his amiable, spirited 1950 Decca rendition of Johann Strauss II's Die Fledermaus, with the Vienna Philharmonic and State Opera star soloists (not including any of the dialogue; only the second complete recording after a pre-World-War-I acoustical 78 set made in Berlin), is still regarded by many as the best, most authentic and most "gemütlich." His 1953 live performance of Richard Wagner's Ring Cycle from Bayreuth is highly regarded. A performance with the Vienna Symphony of Beethoven'sChoral Fantasy, reissued on more than one inexpensive label since its original appearance on a Vox LP, is also one of the few recordings featuring pianist Friedrich Wührer. All three have been reissued on compact disc.