Born in Kecskemét, Kodály's learned to play the violin as a child. He also sang in a cathedral choir and wrote music, despite having little formal musical education.
In 1900, Kodály entered the University of Budapest to study modern languages, and began to study music at the Franz Liszt Academy of Music in Budapest, where Hans Koessler taught him composition.
One of the first people to undertake the serious study of folk tales, Kodály became one of the most significant early figures in the field of ethnomusicology. In 1905 he visited remote villages to collect songs recording them on phonograph cylinders. In 1906 he wrote the thesis on Hungarian folk song ("Strophic Construction in Hungarian Folksong"). Around this time Kodály met fellow composer Béla Bartók, whom he took under his wing and introduced to some of the methods involved in folk song collecting. The two became lifelong friends and champions of each other's music.
After gaining his PhD in philosophy and linguistics, Kodály went to Paris where he studied with Charles-Marie Widor. There he discovered and absorbed various influences, notably the music of Claude Debussy. In 1907 he moved back to Budapest and gained a professorship at the Academy of Music there. He continued his folk music-collecting expeditions through World War I without interruption.
Kodály had composed throughout this time, producing two String quartets (Op. 2, 1909 and Op. 10, 1917 respectively), Sonata for cello and piano (Op. 4, 1910) and Sonata for cello solo (Op. 8, 1915), and his Duo for violin and cello (Op. 7, 1914). All these works show a great originality of form and content, a very interesting blend of highly sophisticated mastery in the Western-European style of music, including classical, late-romantic, impressionistic and modernist tradition and at the other hand profound knowledge and respect for the folk music on Hungary, Slovakia, Bulgaria, Albania and other Eastern-European countries. Due to the outbreak of the First World War and subsequent major geopolitical changes in the region and partly because of the personal shyness Kodály had no major public success until 1923 when his Psalmus Hungaricus premiered at a concert to celebrate the fiftieth anniversary of the union of Buda and Pest (Bartók's Dance Suite premiered on the same occasion.) Following this success, Kodály travelled throughout Europe to conduct his music.
Kodály was very interested in the problems of music education, and he wrote a large amount of material on music education methods as well as composing a large amount of music for children. Beginning in 1935, along with colleague Jenö Ádám, he embarked on a long term project to reform music teaching in the lower and middle schools. His work resulted in the publication of several highly influential books and he had a profound impact on musical education both inside and outside his home country. The Hungarian music education method that developed in the 1940s became the basis for what is called the "Kodály Method". Kodaly himself did not write a comprehensive method, but he did establish a set of principles to follow in music education.
He continued to compose for professional ensembles also, with the Dances of Marosszék (1930, in versions for solo piano and for full orchestra), the Dances of Galanta (1933, for orchestra), the Peacock Variations (1939, commissioned by the Concertgebouw Orchestra to celebrate its fiftieth anniversary) and the Missa Brevis (1944, for soloists, chorus, orchestra and organ) among his better known works. The suite from his opera Háry János (1926) also became well known, though few productions of the opera itself take place. It was first performed in Budapest and conductors such as Toscanini, Mengelberg and Furtwangler have included this piece in their repertoires.
Kodály remained in Budapest through World War II, retiring from teaching in 1942. In 1945 he became the president of the Hungarian Arts Council, and in 1962 received the Order of the Hungarian People's Republic. His other posts included a presidency of the International Folk Music Council, and honorary presidency of the International Society for Music Education. He died in Budapest in 1967, one of the most respected and well known figures in the Hungarian arts.