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The son of a farmer from Cēsis (now in Latvia), Walden was educated at Riga Polytechnic, where he studied under Wilhelm Ostwald. Having become professor of chemistry in 1894, he remained at the polytechnic until the Russian Revolution, when he moved to Germany. From 1919 to 1934 he served as professor of chemistry at the University of Rostock.

In 1896 Walden found that if he took a sample of malic acid that rotated polarized light in a clockwise direction and allowed it to react in a certain way, then on recovery it would be found to rotate polarized light in a counterclockwise direction. The actual reaction involved first combining the malic acid with phosphorus pentachloride to give chlorosuccinic acid. This converts back into malic acid under the influence of silver oxide and water but the malic acid has an inverted configuration. Such inversions later became a useful tool for studying the detail of organic reactions.Walden inversions, as they are called, occur when an atom or group approaches a molecule from one direction and displaces an atom or group from the other side of the molecule.

Walden also worked on the electrochemistry of nonaqueous solutions and formulated Walden's rule, which relates conductivity and viscosity in such solutions. In later life he turned to the history of chemistry on which topic he is notable for having regularly lectured at the University of Tübingen while well into his nineties.