Jagić was born in Varaždin (then known by its German name of Warasdin) where he attended the elementary school and is the place where he started his middle school education. He finished that level of education at the Gymnasium in Zagreb. Having a particular interest in philology, he moved to Vienna where he was lectured in Slavistics under the guidance of Franc Miklošič. He continued his studies and defended his doctoral dissertation Das Leben der Wurzel 'dê in Croatischen Sprachen in Leipzig (Germany) in 1871.

Upon finishing the studies Jagić returned to Zagreb where in the period between 1860 – 1870 he held the position of Professor at Gymnasium (Croatian High School).

In 1869, Jagić was elected a full member of the Croatian Academy of Sciences and Arts (at that time named the Yugoslav Academy of Sciences and Arts), and a correspondent member of the Russian Academy of Sciences in Saint Petersburg. Next year, 1871, he became a professor of Slavistics in Odessa University (Novorossiysk University) and worked also in Berlin where he moved in 1874 to become the very first professor of Slavistics at the prestigious Friedrich Wilhelm University of Berlin. Jagić held the mentioned post until 1880 when he moved again and became teacher at the University of St Petersburg.

In 1886 he returned to Vienna where his studies started to be a replacement for retiring former lecturer Miklošič at the University of Vienna. Here he educated, researched, published and worked until his own retirement in 1908.

Jagić died in Vienna but was put to rest in his native Varaždin.

Works on literature and language written by Jagić started to be published for the first time in the reports of the Gymnasium where he worked. In 1863, with his fellow researchers Franjo Torbar and Franjo Rački he initiated a journal named Književnik. Within, he published several articles regarding the problematic of the grammar, syntax, as well that one of history of the language used by Croats. His works were noticed within the Yugoslav Academy of Sciences and Arts (JAZU) founded in Croatia in 1866. His works and polemics were mainly related to verbs, its paleography, vocalization of the language, folk poetry and its sources. At that time he also initiated publishing the collection of the works written by old Croatian writers.

In Berlin, he initiated publishing Archiv für slavische Philologie ("Archive for Slavic Philology"), and kept editing it for 45 years. The periodical focused the attention of scholars and ordinary people to Slavs, increased their interest in the Slav language and their culture. It also confirmed the importance of Slavistics, its methodology and validity as a scientific discipline.

While in Vienna, his intention was to write an encyclopedia related to the philology of the Slavs. This idea caused him to write Istorija slavjanskoj filologii ("History of Slavic philology"). This book was published in Petrograd in 1910 and contains the retrospective on the development of Slavistics since the beginning to the end of 19th century.

Jagić's work is impressive in scope and quality: Croatian linguist Josip Hamm has remarked that Jagić's collected works would, put together, number more than 100 volumes of large format.

Among his most famous students were the Polish Slavist, Aleksander Brückner, and the Ukrainian poet and scholar, Ivan Franko.

He was very interested in the language of the old Slavs (staroslavenski jezik, Old Church Slavonic), concluded and proved that it did not originate in the central plains of Pannonia as most experts claimed, but in southern Macedonia. Jagić was interested in the life and work of Juraj Križanić (1618 - 1683), a Dominican priest who had shown considerable interest in Pan - Slavism and the cooperation of Catholicism and Orthodoxy.

He spent the greater portion of his life out of Croatia but promoted it through his lecturing and was always in touch with events relating to the language and culture at home. Politically, he was a person often criticized for being insensitive and lacking in action and involvement politically beneficial for the Croats. However, this opinion, although not without foundation, when dispassionately analyzed, has lost much of its edge: Jagić's numerous articles and books on the Croatian language, its grammatical structure and historical morphology recorded in earliest written works had done much to ascertain and chart the continuity of modern Croatian standard language with its medieval and Renaissance vernacular origin.