After graduating, he quickly developed and presented his M.D. thesis on the physiological activities of pituitary extracts, published in 1911, a theme he would pursue for the rest of his scientific career. Since 1908 he was already an assistant lecturer in the same department, and immediately after his doctorate he took up the post of Professor of Physiology in the University's School of Veterinary Medicine. Simultaneously, he started a private practice and as assistant physician at the municipal hospital of Buenos Aires. In 1913 he became Chief Physician at the Alvear Hospital, and, in 1915, Chief of the Section of Experimental Pathology at the National Public Health Laboratories in Buenos Aires.

In 1919 Houssay was appointed to the chair of physiology at the University of Buenos Aires Medicine School, and, until 1943, he transformed and directed it into a highly respected research department in experimental physiology and medicine of international class. In that year, however, the military dictatorship deprived him of his university posts, due to his liberal political ideas and Houssay was forced to re-establish his research lines and staff at a privately funded Instituto de Biología y Medicina Experimental. This situation, reinforced by a second dismissal by the Peronista government in 1945, was prolonged until 1955, when Peron was ousted from power and Houssay was reinstated in the University of Buenos Aires, where he remained till he died. After this he was also director of the National Scientific and Technical Research Council, from 1957 on.

Houssay’s worked in many fields of physiology, such as the nervous, digestive, respiratory and circulatory systems, but his main contribution, which was recognized by the Nobel Prize in Physiology or Medicine of 1947, was on the experimental investigation of the role of the anterior hypophysis gland in the metabolism of carbohydrates, particularly in diabetes mellitus. Houssay demonstrated in the 1930s the diabetogenic effect anterior hypophysis extracts and the decrease in diabetes severity with anterior hypophysectomy. These discoveries stimulated the study of hormonal feedback control mechanisms which are central to all aspects of modern endocrinology.

Houssay’s many disciples along his years of activity became also influential by themselves as they spread around the world; such as Eduardo Braun-Menéndez, and Miguel Rolando Covian (who went to become the "father" of Brazilian neurophysiology, as chairman of the Department of Physiology of the Medical Faculty of Ribeirão Preto of the University of São Paulo). Houssay wrote with them the most influential textbook of Human Physiology in Latin America, in Spanish and Portuguese (the latter was translated by Covian and collaborators), which, since 1950 has been published in successive editions and used in almost all medical schools of the continent. Houssay published more than 600 scientific papers and several specialized books. Besides the Nobel, Houssay won many distinctions and awards from the Universities of Harvard, Cambridge, Oxford and Paris and 15 other universities, as well as the Dale Medal of the London Society for Endocrinology in 1960.

Houssay was also very active as a scientific leader and promoter of the advancement of scientific research and medical education, in Argentina as well as in Latin America.