Alfred Nobel was the third son of Immanuel Nobel (1801–1872) and Andriette Ahlsell Nobel (1805–1889). Born in Stockholm on 21 October 1833, he went with his family to Saint Petersburg in 1842, where his father (who had invented modern plywood) started a "torpedo" works. Alfred studied chemistry with Professor Nikolay Nikolaevich Zinin. When Alfred was 18, he went to the United States to study chemistry for four years and worked for a short period under John Ericsson.[1] who designed the American Civil War ironclad USS Monitor. In 1859, the factory was left to the care of the second son, Ludvig Nobel (1831–1888), who greatly improved the business. Alfred, returning to Sweden with his father after the bankruptcy of their family business, devoted himself to the study of explosives, and especially to the safe manufacture and use of nitroglycerine (discovered in 1847 by Ascanio Sobrero, one of his fellow students under Théophile-Jules Pelouze at the University of Torino). A big explosion occurred on the 3 September 1864 at their factory in Heleneborg in Stockholm, killing five people. Among them was Alfred's younger brother Emil.

Though Nobel remained unmarried, his biographers note that he had at least three loves. Nobel's first love was in Russia with a girl named Alexandra, who rejected his proposal. In 1876 Austro-Bohemian Countess Bertha Kinsky became Alfred Nobel's secretary. But after only a brief stay she left him to marry her previous lover, Baron Arthur Gundaccar von Suttner. Though her personal contact with Alfred Nobel had been brief, she corresponded with him until his death in 1896, and it is believed that she was a major influence in his decision to include a peace prize among those prizes provided in his will. Bertha von Suttner was awarded the 1905 Nobel Peace prize, 'for her sincere peace activities'.

Nobel's third and long-lasting love was with a flower girl named Sofie Hess from Vienna. This liaison lasted for 18 years and in many of the exchanged letters, Nobel addressed his love as 'Madame Sofie Nobel'. After his death, according to his biographers – Evlanoff and Fluor, and Fant – Nobel's letters were locked within the Nobel Institute in Stockholm and became the best-kept secret of the time. They were released only in 1955, to be included with the biographical data of Nobel.

The foundations of the Nobel Prize were laid in 1895 when Alfred Nobel wrote his last will, leaving much of his wealth for its establishment. Since 1901, the prize has honored men and women for outstanding achievements in physics, chemistry, medicine, literature and for work in peace.

Sri Kantha has suggested that 'the one personal trait of Nobel that helped him to sharpen his creativity include his talent for information access, via his multi-lingual skills. Despite the lack of formal secondary and tertiary level education, Nobel gained proficiency in six languages: Swedish, French, Russian, English, German and Italian. He also developed literary skills to write poetry in English.' His Nemesis, a prose tragedy in four acts about Beatrice Cenci, partly inspired by Percy Bysshe Shelley's The Cenci, was printed while he was dying. The entire stock except for three copies was destroyed immediately after his death, being regarded as scandalous and blasphemous. The first surviving edition (bilingual Swedish–Esperanto) was published in Sweden in 2003. The play has been translated to Slovenian via the Esperanto version. In 2010 it was published in Russia as another bilingual (Russian–Esperanto) edition.

Nobel was elected a member of the Royal Swedish Academy of Sciences in 1884, the same institution that would later select laureates for two of the Nobel prizes, and he received an honorary doctorate from Uppsala University in 1893.

Nobel found that when nitroglycerin was incorporated in an absorbent inert substance like kieselguhr (diatomaceous earth) it became safer and more convenient to handle, and this mixture he patented in 1867 as 'dynamite'. Nobel demonstrated his explosive for the first time that year, at a quarry in Redhill, Surrey, England. In order to help reestablish his name and improve the image of his business from the earlier controversies associated with the dangerous explosives, Nobel had also considered naming the highly powerful substance "Nobel's Safety Powder", but settled with Dynamite instead, referring to the Greek word for 'power'.

Nobel later on combined nitroglycerin with various nitrocellulose compounds, similar to collodion, but settled on a more efficient recipe combining another nitrate explosive, and obtained a transparent, jelly-like substance, which was a more powerful explosive than dynamite. 'Gelignite', or blasting gelatin, as it was named, was patented in 1876; and was followed by a host of similar combinations, modified by the addition of potassium nitrate and various other substances. Gelignite was more stable, transportable and conveniently formed to fit into bored holes, like those used in drilling and mining, than the previously used compounds and was adopted as the standard technology for mining in the Age of Engineering bringing Nobel a great amount of financial success, though at a significant cost to his health. An off-shoot of this research resulted in Nobel's invention of ballistite, the precuser of many modern smokeless powder explosives and still used as a rocket propellant.

In 1888 Alfred's brother Ludvig died while visiting Cannes and a French newspaper erroneously published Alfred's obituary.[2] It condemned him for his invention of dynamite and is said to have brought about his decision to leave a better legacy after his death.[2][3] The obituary stated Le marchand de la mort est mort ("The merchant of death is dead")[2] and went on to say, "Dr. Alfred Nobel, who became rich by finding ways to kill more people faster than ever before, died yesterday."[4] Alfred was disappointed with what he read and concerned with how he would be remembered. On 27 November 1895, at the Swedish-Norwegian Club in Paris, Nobel signed his last will and testament and set aside the bulk of his estate to establish the Nobel Prizes, to be awarded annually without distinction of nationality. He died of a stroke on 10 December 1896 at Sanremo, Italy. After taxes and bequests to individuals, Nobel's will gave 31,225,000 Swedish kronor (equivalent to about 1.8 billion kronor or 250 million US dollars in 2008) to fund the prizes.[5]

The first three of these prizes are awarded for eminence in physical science, in chemistry and in medical science or physiology; the fourth is for literary work "in an ideal direction" and the fifth prize is to be given to the person or society that renders the greatest service to the cause of international fraternity, in the suppression or reduction of standing armies, or in the establishment or furtherance of peace congresses. There is no prize awarded for mathematics,[6] but see Abel Prize.

The Formulation about the literary prize, "in an ideal direction" (i idealisk riktning in Swedish), is cryptic and has caused much confusion. For many years, the Swedish Academy interpreted "ideal" as "idealistic" (idealistisk) and used it as a reason not to give the prize to important but less Romantic authors, such as Henrik Ibsen and Leo Tolstoy. This interpretation has since been revised, and the prize has been awarded to, for example, Dario Fo and José Saramago, who definitely do not belong to the camp of literary idealism.[original research?]

There was also quite a lot of room for interpretation by the bodies he had named for deciding on the physical sciences and chemistry prizes, given that he had not consulted them before making the will. In his one-page testament, he stipulated that the money go to discoveries or inventions in the physical sciences and to discoveries or improvements in chemistry. He had opened the door to technological awards, but had not left instructions on how to deal with the distinction between science and technology. Since the deciding bodies he had chosen were more concerned with the former, it is not surprising that the prizes went to scientists and not to engineers, technicians or other inventors.

In 2001, Alfred Nobel's great-grandnephew, Peter Nobel (b. 1931), asked the Bank of Sweden to differentiate its award to economists given "in Alfred Nobel's memory" from the five other awards. This has caused much controversy whether the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel is actually a "Nobel Prize" / "Peace Prize".