Fischer was born in Ludwigsstadt in Bavaria. His father was a railroad inspector. Educated at grammar schools in Ansbach and Eichstätt, Fischer attended the University of Berlin and the University of Erlangen, where he studied history, pedagogy, philosophy and theology. Fischer joined the Nazi Party in 1939, and left the Party in 1942. Fischer's major early influences were the standard Hegelian-Rankean idea typical of the pre-1945 German historical profession, and as such, Fischer's early writings bore a strong bent towards the right. This influence was reflected in Fischer's first books, biographies of Ludwig Nicolovius, a leading 19th century Prussian educational reformer and of Moritz August von Bethmann Hollweg, the Prussian Minister of Education between 1858-1862.

In 1942, Fischer married Margarete Lauth-Volkmann, with whom he fathered two children. Fischer served in the Wehrmacht in World War II. After his release from a POW camp in 1947, Fischer became a professor at the University of Hamburg, where he stayed until his retirement in 1978.

After World War II, Fischer re-evaluated his previous beliefs, and decided that the popular explanations of National Socialism offered by such historians as Friedrich Meinecke in which Adolf Hitler was just a Betriebsunfall (occupational accident) of history were unacceptable. In 1949, at the first post-war German Historians' Congress in Munich, Fischer strongly criticized the Lutheran tradition in German life, accusing the Lutheran church of glorifying the state at the expense of individual liberties and thus helping to bring about Nazi Germany. Fischer complained that the Lutheran church had for too long gloried the state as divinely sanctioned institution that could do no wrong, and thus paved the way for National Socialism. Fischer rejected the then popular arguments in Germany that Nazi Germany had been the result of the Treaty of Versailles, and instead argued that the origins of Nazi Germany predated 1914, and were the result of long-standing ambitions of the German power elite.

In the 1950s, Fischer was the first historian who examined all of the Imperial German government archives in their entirety, and as a result as the American Klaus Epstein noted, when Fischer published his findings in 1961, he instantly rendered obsolete every book previously published on the subject of responsibility for the First World War, and German aims in that war.

By 1961, Fischer, who had risen to the rank of full professor at the University of Hamburg, rocked the history profession with his first postwar book, Griff nach der Weltmacht: Die Kriegzielpolitik des kaiserlichen Deutschland 1914–1918 (published in English as Germany's Aims in the First World War), in which he argued that Germany had deliberately instigated the First World War in an attempt to become a world power. In this book, which was primarily concerned with the role played in the formation of German foreign policy by domestic pressure groups, Fischer argued that various pressure groups within German society had ambitions for aggressive imperialist policy in Eastern Europe, Africa and the Middle East. In Fischer's opinion, the "September Program" of September 1914 calling for the annexation of most of Europe and Africa was an attempt at compromise between the various demands of the lobbying groups within German society for wide-ranging territorial expansion. Fischer argued that the German government deliberately and consciously used the crisis occasioned by the assassination of Archduke Franz Ferdinand in the summer of 1914 to execute already preformulated plans for a war against France and Russia in order to create Mitteleuropa, a German-dominated Europe and Mittelafrika, a German-dominated Africa. Though Fischer argued that the German government did not want a war with Britain at that moment, they were fully preparded to run the risk in pursuit of Mitteleuropa and Mittelafrika.

The book was preceded by Fischer's groundbreaking 1959 article in Historische Zeitschrift in which he first published the arguments that he expanded upon in his 1961 book. In War, Peace, and the Course of History, Philip Bobbitt has written that after Fischer published it became, "Impossible to maintain" that World War I had been some sort of "ghastly mistake" rather than a deliberate and intentional German policy.

For most Germans, it was acceptable to believe that Germany had caused World War Two, but not World War One, which was still widely regarded as a war forced upon Germany. Fischer was the first German historian to publish documents showing that the German chancellor Dr. Theobald von Bethmann Hollweg had developed plans in 1914 to annex all of Belgium, part of France and part of European Russia. Fischer suggested that there was continuity in German foreign policy from 1900 to the Second World War, implying that Germany was responsible for both world wars. These ideas were expanded in his later books Krieg der Illusionen (War of Illusions), Bündnis der Eliten (From Kaiserreich to Third Reich) and Hitler war kein Betriebsunfall (Hitler Was No Chance Accident). Though Fischer was an expert in the Imperial era, his work was important in the debate about the foreign policy of the Third Reich.

In his 1969 book Krieg der Illusionen, Fischer offered a detailed study of German politics from 1911 to 1914, in which he offered a Primat der Innenpolitik (Primacy of Domestic Politics) analysis of German foreign policy. In Fischer's view, the Imperial German state saw itself under siege by rising demands for democracy at home and looked to distract democratic strivings through a policy of aggressive expansionism abroad.

Fischer was the first German historian to support the negative version of the "Sonderweg" or "special path"' interpretation of German history, which holds that the way German culture and society developed from the Reformation onwards (or from a later time, such as the establishment of the German Reich of 1871) inexorably culminated in the Third Reich. In Fischer's view, while 19th century German society moved forwards economically and industrially, it did not do so politically. For Fischer, German foreign policy before 1914 was largely motivated by the efforts of the reactionary German elite to distract the public from casting their votes for the Social Democrats and to make Germany the world's greatest power at the expense of France, Britain, and Russia. The German elite that caused World War One also caused the failure of the Weimar Republic and ushered in the Third Reich. This traditional German elite, in Fischer's analysis, was dominated by a racist, imperialist and capitalist ideology that was no different from the beliefs of the Nazis. For this reason, Fischer called Bethmann-Hollweg the "Hitler of 1914." Fischer's claims set off the so-called "Fischer Controversy" of the early 1960s when German historians led by Gerhard Ritter attempted to rebut Fischer but as the Australian historian John Moses noted in 1999, the documentary evidence introduced by Fischer is extremely persuasive in arguing that Germany was responsible for World War I. In 1990, The Economist advised its readers to examine Fischer’s “well documented” book to examine why people in Eastern Europe feared the prospect of German unification.

Fischer with his analytical model caused a revolution in German historiography. Fischer's Primat der Innenpolitik heuristic, with its examination of the "inputs" into German foreign policy by domestic pressure groups and their interaction with the imperialist ideas of the German elite, forced a reevaluation of German foreign policy in the Imperial era. In addition, Fischer's discovery of Imperial German government documents calling for a war aim the ethnic cleansing of Russian Poland and the subsequent German colonization in order to provide Germany with Lebensraum (living space) led many to argue that similar schemes pursued by the Nazis in World War II were not due solely to Adolf Hitler's ideas but rather reflected the widely held German aspirations that long pre-dated Hitler. Many German historians in the 1960s such as Gerhard Ritter who liked to argue that Hitler was just a betriebsunfall (industrial accident) of history with no real connection to German history were outraged by Fischer's publication of these documents and attacked Fischer for "anti-German" work.

Fischer caused a deep controversy with his books, particularly in West Germany. His arguments sparked so much anger that his publisher's office in Hamburg was firebombed. His works inspired other historians, such as Gerhard Ritter, to write books and articles in direct response to his war-aims thesis. In 1964, Ritter successfully lobbied the West German Foreign Ministry to cancel the travel funds that had been allocated for Fischer to visit the United States; in Ritter's opinion, giving Fischer a chance to express his "anti-German" views would be a "national tragedy", and it was the best that Fischer not be allowed have his American trip.

Some critics contend that Fischer placed Germany outside the proper historical context. Germany was not uniquely aggressive amongst European nations of the early 20th century, a time when Darwinian ideals of struggle were popular throughout European governing circles. Fischer's timetable has also been criticized as inaccurate. Hollweg's Septemberprogramm outlining German war aims, was not produced until after the war had begun and was still going well for Germany. At the same time, other powers had been harboring similarly grandiose plans.