Born in Olbernhau, Saxony, Kretzschmar was son of the organist and cantor Karl Dankegott Kretzschmar. He was from 1862 a student in the Kreuzschule in Dresden, where from 1867–1868 he was twice Prefect of the Dresdner Kreuzchor. In addition, from 1870 he studied Philology at Leipzig University as well as Music at the Leipzig Conservatory and was awarded his doctorate there. From 1871 he was actively teaching in Theory, Composition, Piano and Organ at the Leipzig Conservatory, and acted as director/conductor for various musical societies. In 1876 he became theatre orchestra conductor in Metz, and undertook research expeditions in England and Italy for the study of musical history; from 1877 to 1887 he was an academic and state music director in Rostock.
From 1887 to 1904 he renewed his position in Leipzig as active University Music Director. From 1888-1898 he was Director of the Riedel Choral Society. In the year 1890 he was awarded an honorary professorship, and in 1890 he founded the Leipzig Academic Concerts which he conducted until 1895. In 1904 he was appointed as regular Professor of Music at the University of Berlin; from 1907–1922 he was Director of the Royal Institute for Church Music, and also (from 1909–1920) as successor to Joseph Joachim he was Director of the High School for Music founded in 1869 (i.e. the Berlin Hochschule). He was a government privy counsellor. One of his students was composer and musicologist Walter Niemann. See: List of music students by teacher: K to M#Hermann Kretzschmar.
Kretzschmar was from 1880 married to the British pianist Klara Meller.
He died in Berlin-Schlachtensee in 1924, after which he was buried in a grave of honour in the Evangelic Nicholassee churchyard in Berlin.
In his novel Doktor Faustus, Thomas Mann creates the character of Dr Wendell Kretschmar, the inspirational and eccentric musicologist, lecturer and teacher of the composer Adrian Leverkühn. The name is probably given in homage to his real-life contemporary Hermann Kretzschmar, whose essays in musical interpretation were widely read and appreciated around the turn of the twentieth century.
- Führer durch den Konzertsaal (Guide through the concert hall) Leipzig 1887-90
- Geschichte des neuen deutschen Liedes (History of the more recent German song), 1911 (Volume I, from Von Albert to Zelter only completed)(Leipzig, Breitkopf & Härtel).
- Geschichte der Oper (History of Opera) 1919
- Einführung in die Musikgeschichte (Introduction to the History of Music), 1920