He began his studies at the University of Erlangen, where he met Ernst Troeltsch (1865–1923), with whom he would maintain a friendship that would last throughout his career. Later he studied at Leipzig, where he was student of Adolf von Harnack (1851–1930), and afterwards continued his studies at the University of Göttingen. In 1890 he became a professor of New Testament exegesis at Göttingen, later relocating to the University of Giessen (1916).
Bousset was a prominent figure in the Religionsgeschichtliche Schule (history of religions school), a group that included scholars such as Richard August Reitzenstein (1861–1931), Albert Eichhorn (1856–1926) and Hermann Gunkel (1862–1932). His better known work involved comparative studies between the Early Christian Church and other religious beliefs, particularly Hellenistic Judaism. Bousset demonstrated in his writings that Christian thought was profoundly influenced by neighboring cultures and belief systems.
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Bousset was a prolific writer, and among his books that were translated into English were Kyrios Christos: Geschichte des Christusglaubens von den Anfängen des Christentums bis Irenäus (Kyrios Christos; A History of the Belief in Christ from the Beginnings of Christianity to Irenaeus), and Der Antichrist in Der Uberlieferung Des Judentums, Des Neuen Testaments Und Der Alten Kirche (Antichrist Legend: A Chapter in Christian and Jewish Folklore). Other noted works by Bousset include:
- Jesu Predigt in ihrem Gegensatz zum Judentum. Ein religionsgeschichtlicher Vergleich (1893)
- Der Antichrist in der Ueberlieferung des Judentums, des neuen Testaments und der alten Kirche (1895)
- Offenbarung Johannis (Kritisch-Exegetischer Kommentar Über Das Neue Testament) (1896)
- contributions to the Encyclopaedia Biblica (1903)
- Die Religion des Judentums im neutestamentlichen Zeitalter (1903)
- Das Wesen Der Religion Dargestellt an Ihrer Geschichte (1904)
- Religionsgeschichtliche Studien: Aufsdtze Zur Religionsgeschichte Des Hellenistischen Zeitalters
- Hauptprobleme Der Gnosis (1907)
- contributions to 1911 Encyclopædia Britannica
- History of New Testament Research by William Baird
- "Wilhelm Bousset". Biographisch-Bibliographisches Kirchenlexikon (BBKL) (in German).