Seligman's foundational experiments and theory of "learned helplessness" began at University of Pennsylvania in 1967, as an extension of his interest in depression. Quite by accident, Seligman and colleagues discovered that the conditioning of dogs led to outcomes that were opposite to the predictions of B.F. Skinner's behaviorism, then a leading psychological theory.

Seligman developed the theory further, finding learned helplessness to be a psychological condition in which a human being or an animal has learned to act or behave helplessly in a particular situation - usually after experiencing some inability to avoid an adverse situation - even when it actually has the power to change its unpleasant or even harmful circumstance. Seligman saw a similarity with severely depressed patients, and argued that clinical depression and related mental illnesses result in part from a perceived absence of control over the outcome of a situation. The experiments have been controversial due to the severe pain applied to dogs over an extended period. Seligman applied intense electrical shocks to the dogs causing them to howl and involuntarily urinate. They were left with no options to avoid the pain and an understanding that it would continue with no relief.

According to author Jane Mayer, Seligman gave a talk at the Navy SERE school in San Diego in 2002, which he said was a three-hour talk on helping U.S. soldiers to resist torture, based on his understanding of learned helplessness.

Positive psychology, the study of optimal human functioning, is an attempt to respond to the systematic bias inherent in psychology's historical emphasis on mental illness rather than on mental wellness. Humanistic psychologists such as Abraham Maslow and Carl Rogers developed theories along these lines, but without solid empirical support. The pioneering research of a new generation of psychologists has led to a renewed interest in this approach, providing a firm scientific foundation for the study of human happiness and optimal function, thus adding a positive side to the predominantly negative discipline of psychology.

Seligman worked with Christopher Peterson to create the 'positive' counterpart to the DSM (Diagnostic and Statistical Manual of Mental Disorders). While the DSM focuses on what can go wrong, Character Strengths and Virtues looks at what can go right. In their research they looked across cultures and across millennia to distill a manageable list of virtues that have been highly valued from ancient China and India, through Greece and Rome, to contemporary Western cultures. Their list includes six character strengths: wisdom/knowledge, courage, humanity, justice, temperance, and transcendence. Each of these has perhaps a half-dozen sub-entries - for instance, temperance includes forgiveness, humility, prudence, and self-regulation. One of their key points is that they do not believe that there is a hierarchy for the six virtues — no one is more fundamental than or a precursor to the others.

In 1966, Martin E.P. Seligman reported that, while using aversion therapy to try to change gay men's sexual orientation to heterosexual was controversial, in some instances, the process "worked surprisingly well", with up to 50% of men subjected to such therapy not acting on their homosexual urges. These results produced what Seligman described as "a great burst of enthusiasm about changing homosexuality that swept over the therapeutic community" after the results were reported in 1966. However, Seligman notes that the findings were later demonstrated to be flawed: most of the men treated with aversion therapy who did in fact stop homosexual behavior were actually bisexual. Among men with an exclusive or near-exclusive homosexual orientation, aversion therapy was far less successful.

The Master of Applied Positive Psychology program at the University of Pennsylvania was established under the leadership of Seligman as the first educational initiative of the Positive Psychology Center in 2003.

According to an interview last year for his electronic journal Prevention and Treatment Seligman said magenta was his favorite color because of the amazing calming effects of the color on the human body. He plays bridge, and finished second in one of the three major North American pair championships, the Blue Ribbon Pairs (1997), and has done well in many regional championships. He has seven children, four grandchildren and two dogs, Rosie and Lily. Seligman was inspired by the work of the psychiatrist Aaron T. Beck at the University of Pennsylvania in refining his own cognitive techniques and exercises.