Adler was born in Stadtlengsfeld, Germany; his mother died when he was born. He came to the United States with his father Liebman, a rabbi, in 1854.  Adler served in the Union Army during the Civil War. Thereafter, he practiced in Chicago, from 1866 onward. He worked first with Augustus Bauer and next with Ozias S. Kinney. Adler formed a partnership with Edward Burling in 1871; they created more than 100 buildings together before ending the partnership.  After he began his own firm, Adler hired Louis Sullivan as a draughtsman and designer in 1880; Sullivan was made a partner in the firm in 1883.

Adler’s partnership with Sullivan was short-lived; due to a slump in their architectural practice brought on by the Panic of 1893, and Adler’s desire to bring his two sons into the firm, there arose a rift with Sullivan, the result of which was that Adler left the partnership to join an elevator firm as engineer and salesman. After a short period, Adler returned to architecture, in partnership with his two sons, but never regaining the prominence he had with Sullivan.  Adler was not only an architect but also a gifted civil engineer who, with his partner Louis Sullivan, designed many buildings including influential skyscrapers that boldly addressed their steel skeleton through their exterior design: the Guaranty Building in Buffalo, New York, the Chicago Stock Exchange Building (1894–1972) and the Wainwright Building in St. Louis, Missouri.

Adler and Sullivan’s Auditorium Building (1889) is an early example of splendid acoustical engineering, as is their Kehilath Anshe Ma’ariv Synagogue. Both drew upon the fine acoustics in Adler’s earlier Central Music Hall. Adler was an acclaimed expert in acoustics, yet he was unable to explain fully the excellent acoustic properties of his buildings.  With his partner Burling and thereafter, as a partner in Adler and Sullivan, Adler was instrumental in rebuilding much of Chicago following the Great Chicago Fire. Adler is considered a leader in the Chicago school of architecture. In addition to their pioneering accomplishments with steel-framed buildings and skyscrapers, Dankmar Adler and Louis Sullivan were early employers and mentors of architect Frank Lloyd Wright, whose consistent praise for Adler (“the ‘American Engineer’ my ‘Big Chief'”) surpassed even that which he reserved for Sullivan, whom he called his “lieber meister”.  The last major building Adler designed was Temple Isaiah.

On June 25, 1872, Adler married Dila Kohn (5 July 1850 – 3 December 1918). Their children include: Abraham K. Adler (September 13, 1873 – October 30, 1914), Sidney Adler (26 June 1876 – 25 November 1925) and Sadie Adler (born 1878). Adler died in Chicago, Illinois, United States, and his final resting place is the Mount Maryiv Cemetery in Chicago.  Photographs and other archival materials are held by the Ryerson & Burnham Libraries at the Art Institute of Chicago. The Dankmar Adler Collection of letters, papers, and photographs also includes an autobiography.