Schlegel was born at Altenburg, the son of a brass founder. His father collected butterflies, which stimulated Schlegel's interest in natural history. The discovery, by chance, of a buzzard's nest led him to the study of birds, and a meeting with Christian Ludwig Brehm.

Schlegel started to work for his father but soon tired of it. He travelled to Vienna in 1824 where, at the university, he attended the lectures of Leopold Fitzinger and Johann Jacob Heckel. A letter of introduction from Brehm to Joseph Natterer gained him a position at the Naturhistorisches Museum.

One year after his arrival, the director of this natural history museum, Carl Franz Anton Ritter von Schreibers, recommended him to Coenraad Jacob Temminck, director of the natural history museum of Leiden, who was seeking an assistant. At first Schlegel worked mainly on the reptile collection, but soon his field of activity extended to other zoological groups. It had been intended that Schlegel be sent to Java to join the Natural History Commission, but the untimely death of Temminck's intended successor, Heinrich Boie, prevented the realization of this project. It was at this time that Schlegel met Philipp Franz von Siebold. They became firm friends and collaborated on Fauna Japonica (1845-1850).

When Temminck died at the beginning of 1858, Schlegel succeeded him as director of the natural history museum, after having spent 33 years under his direction. Schlegel was particularly interested in south-east Asia, and in 1857 sent his son Gustav to collect birds in China. Gustav arrived to find that Robert Swinhoe had got there first. In 1859 Schlegel sent Heinrich Agathon Bernstein, to collect birds in New Guinea. After the death of Bernstein in 1865 he was succeeded by Hermann von Rosenberg.

Schlegel took on a young assistant called Otto Finsch. At the same time, he started to publish a scientific magazine, Notes from the Leyden Museum as well as a vast work of 14 volumes, Muséum d'histoire naturelle des Pays-Bas (1862-1880). He employed three talented illustrators: John Gerrard Keulemans, Joseph Smit and Joseph Wolf.

The end of Schlegel's life was difficult: his wife died in 1864, Finsch moved to the natural history museum at Bremen, and the collections of the British Museum started to eclipse those of Leiden.