Adler was born in Prague, the son of a Jewish merchant, who descended from Lipník in Moravia. His family moved to the Leopoldstadt borough of Vienna when he was three years old. He attended the renown Catholic Schottenstift gymnasium, together with Heinrich Friedjung one of the few Jewish students, whereafter he studied chemistry and medicine at the University of Vienna. Having graduated in 1881, he worked as assistant of Theodor Meynert at the psychiatric department of the General Hospital.
In 1878 he had married his wife Emma, their son Friedrich was born in 1879. From 1882 to 1889 the couple resided at 19 Berggasse in the Alsergrund borough of Vienna, an address that later became famous as the office of Sigmund Freud (the present-day Sigmund Freud Museum).
Adler initially supported the German national movement led by Georg Schönerer and worked on the 1882 Linz Program. However, Schönerer's increasing antisemite policies, culminating in the amendment of an Aryan paragraph, led to an estrangement with Adler, who focussed on social issues. From 1886 he published the Marxist journal Gleichheit (Equality), covering the working conditions of the Wienerberger brick factory and agitating against the truck system. After Gleichheit was banned, he issued the Arbeiter-Zeitung (Workers' Paper) from 1889. Adler travelled to Germany and Switzerland, where he met with Friedrich Engels, August Bebel and Karl Liebknecht. He was charged several times for his activities and spent nine months in prison.
Adler, both a moderate and charismatic social democrat, was able to unite the Austrian labour movement under his leadership, fighting against the anti-socialist laws implemented by the Cisleithanian government of Minister President Eduard Taaffe in 1884. At an 1888 conference in Hainfeld he formed the Social Democratic Workers' Party and became first chairman. As a member of the Imperial Council parliament from 1905, he played a leading role in the fight for universal suffrage, finally achieved under Minister President Max Wladimir von Beck in 1906, whereafter the Social Democrats emerged as winner from the 1907 Cisleithanian legislative election. An active supporter of the Second International, Adler tried to maintain the unity of the Austrian Social Democrats beyond ethnic conflicts and backed the idea of the United States of Greater Austria replacing the Dual Monarchy.
Before World War I, Adler was leader of the Socialist Party in Vienna. He publicly backed the Imperial government's decision to go to war, but had private misgivings. Entering the new Austrian government in October 1918, he advocated the Anschluss (unification) of the rump Austrian state with Germany but died before he could pursue this project. He was the father of Friedrich Adler. He died in Vienna.