Illy was brought up in Timisoara where he studied economics. After secondary school he moved to Vienna, where he worked for two big Transylvanian companies. At the age of 22 he was conscripted into the Austro-Hungarian Army, and served from 1914 at almost every front of the First World War, including at the Battle of Kraśnik and the Battles of the Isonzo.
After the war he stayed with his sister in Trieste, where he soon married a Triestine woman. He found work with companies dealing with cocoa and coffee roasting. He later invented his own method for maintaining the quality of freshly roasted coffee so it could be delivered to other locations rather than roasting it on site. He formed a partnership with the local coffee manufacturers Hausbrandt.
His son, the food chemist Ernesto Illy (1925–2008) took over the management of the coffee company, which is now in the hands of the third generation Illy's.
- Stein, Nicholas (9 December 2009). "Crisis in a Coffee Cup". Fortune magazine. Retrieved 25 April 2009.
- Tagliabue, John (26 December 2006). "Coffeehouses as Fashion Boutiques; Selling Cachet by the Cup". The New York Times. Retrieved 25 April 2009.