Born in Lipnik, Poland, Schnabel studied piano from the age of seven in Vienna, Austria under Theodor Leschetizky who said to him "You will never be a pianist. You are a musician." Schnabel took these words to heart, and rather than playing the showy virtuoso pieces by composers like Franz Liszt which were popular in the late 19th century, he chose to concentrate on Germanic classics by Mozart, Beethoven and Schubert. Later, Schnabel also studied composition under Eusebius Mandyczewski who was a friend of Johannes Brahms.
In 1900, Schnabel moved to Berlin where he began his career as a professional pianist. He gained some fame thanks to orchestral concerts he gave under the conductor Artur Nikisch as well as playing in chamber music and accompanying his future wife, the contralto Therese Behr, in lieder. It seems that Behr had some influence over Schnabel's repertoire, encouraging him to explore the sonatas of Schubert and the works of Brahms.
Following World War I, Schnabel toured widely, visiting the United States, Russia and England. From 1925 he taught at the Berlin State Academy where his masterclasses brought him great renown.
Schnabel was known for championing the then-neglected sonatas of Schubert and, even more so, Beethoven. At that time, Beethoven's piano music was little played and largely unappreciated by the public. While on a tour of Spain, Schnabel wrote to his wife saying that during a performance of Beethoven's Diabelli Variations he had begun to feel sorry for the audience. "I am the only person here who is enjoying this, and I get the money; they pay and have to suffer," he wrote. Schnabel did much to popularize Beethoven's music, giving the first complete cycle of his piano sonatas (that is, he played every piano sonata by Beethoven in a series of concerts) and also making the first recording of them all, completing the set in 1935. This set of recordings has never been out of print, and is considered by many to be the touchstone of Beethoven sonata interpretations. He also recorded all the Beethoven concertos.
Schnabel played with a number of famous musicians in chamber works, including the violinists Carl Flesch and Joseph Szigeti, the violist Paul Hindemith, and the cellists Pablo Casals and Pierre Fournier. Among his piano pupils were Leon Fleischer, Alan Bush and Eunice Norton.
Schnabel, a Jew, left Berlin in 1933 after the Nazi Party took control. He lived in England for a time while giving masterclasses at Tremezzo on Lake Como in Italy, before moving to America in 1939. There he took a teaching post at the University of Michigan, returning to Europe at the end of World War II. He continued to give concerts until the end of his life and continued to compose, completing three symphonies, a piano concerto and five string quartets amongst various smaller works. He also made several records, though he was never very fond of recording. Schnabel died in Axenstein, Switzerland.
Schnabel's book My Life and Music (reprinted 1988; Mineola, NY: Dover Publications), is an engaging mixture of autobiography and commentary on a variety of musical subjects.