Along with Max Steiner and Alfred Newman, he is considered one of the founders of film music. His 1938 Academy Award for his score to The Adventures of Robin Hood marked the first time an Oscar was awarded to the composer rather than the head of the studio music department. 

He was born to a Jewish family , the second son of eminent music critic Julius Korngold. A child prodigy, Erich played his cantata Gold to Gustav Mahler in 1909; Mahler called him a "musical genius" and recommended study with composer Alexander von Zemlinsky. Richard Strauss spoke highly of the youth. At the age of 11 he composed his ballet Der Schneemann, which became a sensation when performed at the Vienna Court Opera in 1910, including a command performance for Emperor Franz Josef. This work was followed first with a piano trio, then his Piano Sonata No. 2 in E major, which Artur Schnabel played throughout Europe. During his early years Korngold also made live-recording player piano music rolls for the Hupfeld DEA and Phonola system and also the Aeolian Duo-Art system, which survive today and can be heard.

Korngold wrote his first orchestral score, the Schauspiel Ouverture when he was 14. His Sinfonietta appeared the following year, and his first two operas, Der Ring des Polykrates and Violanta, in 1914. He completed his opera Die tote Stadt, which became an international success, in 1920 at the age of 23. By this point Korngold had reached the zenith of his fame as a composer of opera and concert music. Composers such as Richard Strauss and Giacomo Puccini heaped praise on him, and many famous conductors, soloists and singers added his works to their repertoires. He completed a Concerto for Piano Left Hand for pianist Paul Wittgenstein in 1923 and his fourth opera, Das Wunder der Heliane four years later. He started arranging and conducting operettas by Johann Strauss II and others while teaching opera and composition at the Vienna Staatsakademie. Korngold was awarded the title professor honoris causa by the president of Austria. In 1924, he married Luzi von Sonnenthal, an actress, writer, singer and pianist, that he had become infatuated with at nineteen. She died in 1962; her biography of her husband was published in 1967. Max Reinhardt, with whom Korngold had collaborated on the operettas Die Fledermaus and La belle Helene, asked the composer to come to Hollywood in 1934 to adapt Felix Mendelssohn's A Midsummer Night's Dream incidental music for his film version of the play. In 1938, Korngold was conducting opera in Austria when he was asked by Warner Brothers to return to Hollywood and compose a score for The Adventures of Robin Hood (1938), starring Errol Flynn and Olivia de Havilland. He agreed and returned by ship. When, shortly after he arrived in California, the Anschluss took place, the condition of Jews in Austria became very perilous, and Korngold stayed in America. Korngold later would say the film score of The Adventures of Robin Hood saved his life. He won the Academy Award for Best Original Score for the film, and he was later nominated for The Private Lives of Elizabeth and Essex (1939, starring Bette Davis and Errol Flynn ) and The Sea Hawk (1940). 

Korngold stopped writing original film scores after 1946. His final score at Warner Bros. was for Deception starring Bette Davis, Paul Henreid, and Claude Rains. However, he was asked by Republic Pictures to adapt the music of Richard Wagner for Magic Fire (1955), a film biography of the composer; the film was released in Trucolor and directed by William Dieterle from a script by Ewald André Dupont. Korngold wrote some original music for the film and had an unbilled cameo as the conductor Hans Richter

After World War II, Korngold continued to write concert music in a rich, chromatic late Romantic style, with the Violin Concerto among his notable later works.

He died in North Hollywood on November 29, 1957, and was buried at Hollywood Forever Cemetery.