Julius ("Julie") Axelrod was born May 30, 1912, on the Lower East Side of Manhattan in New York City, the son of Polish immigrants Isadore and Molly Axelrod. Julius's father supported the family as a basketmaker. Axelrod attended Seward Park High School, where he quickly developed an interest in history, literature, and science, and set his sights on medical school. In 1929, Axelrod enrolled at New York University (NYU); after one year, he transferred to the tuition-free City College of New York, which Axelrod later described as a "proletarian Harvard." Axelrod graduated with a Bachelor of Science degree in biology in 1933. He applied to several medical schools, but was not admitted. Reflecting on these rejections, he told a newspaper reporter in 1970 that "It was hard in those days for Jews to get into medical school. I wasn't that good a student, but if my name was Bigelow I probably would have gotten in."

Axelrod also found it difficult to find work in his field, especially in the middle of the Depression. After a brief stint as a laboratory technician at the Harriman Research Laboratory at NYU Medical School, Axelrod found a position in 1935 testing vitamin supplements added to food, particularly milk, for the New York City Department of Health's Laboratory of Industrial Hygiene. Axelrod remained in this position until 1946. During this period, he lost his left eye in a laboratory accident. In 1938, Axelrod married Sally Taub, an elementary school teacher. Over the next decade, the couple had two sons, Paul and Alfred. While working for the Department of Health, Axelrod took night classes at NYU and earned his Master of Science degree in chemistry in 1941 after completing his master's thesis on the chemical breakdown of enzymes in cancerous tumor tissues.

In 1946, Axelrod began conducting research on the chemistry of analgesic (pain-relieving) medications with Bernard "Steve" Brodie at Goldwater Memorial Hospital on Welfare (now Roosevelt) Island. He continued to work with Brodie, whom he considered to be his mentor, for the next eight years. Their research together laid the foundation for Axelrod's lifelong enthusiasm for pharmacological science. In 1949, Axelrod accepted a position as a research chemist at the National Heart Institute (NHI), a part of the rapidly expanding National Institutes of Health in Bethesda, Maryland. From 1949 to 1955, he pursued many new projects at the NHI that built upon his previous work.

Although Axelrod clearly possessed the requisite skill and scientific expertise to carry out his own research, he knew that without a Ph.D. his opportunities for career advancement were limited. In 1954, Axelrod took a leave of absence from the NIH to attend The George Washington University, where his advisor, George Mandel, permitted him to submit some of his recent NIH laboratory work as the basis of his doctoral dissertation. In 1955, in his early 40s, Axelrod graduated from GWU with a Ph.D. in pharmacology after completing his thesis, "The Fate of Phenylisopropylamines."

In 1954, Axelrod was invited to establish a Section on Pharmacology in Edward Evarts's Laboratory of Clinic Science at the NIH's National Institute of Mental Health (NIMH). In 1957, he began his most famous research project, which focused on the activity of neurotransmitter hormones. Axelrod's work enabled researchers during the 1970s to develop a new class of antidepressant medications, especially selective serotonin reuptake inhibitors (SSRIs) such as Prozac. Over the next thirty years, until his retirement in 1984, he worked on a wide array of research projects in pharmacological science.

In 1970, Axelrod, along with Sir Bernard Katz of University College London and Ulf von Euler of the Karolinska Institute in Stockholm, was awarded the Nobel Prize in Medicine or Physiology for "discoveries concerning the humoral transmitters in the nerve terminals and the mechanism for their storage, release and inactivation." Axelrod remained an active researcher, distinguished lecturer, and public scientist throughout the 1970s, garnering numerous honorary degrees and professional awards. In 1984, at the age of 72, he formally retired from the NIMH. In 1996, he was named Scientist Emeritus of the National Institutes of Health.