Tsui left for Hong Kong in 1951, and attended Pui Ching Middle School in Kowloon, where he graduated in 1957. He was admitted to the National Taiwan University Medical School in Taipei, Taiwan. Tsui was given a full scholarship to the Augustana College in Rock Island, Illinois, United States, which is his church pastor's Lutheran alma mater.
Tsui accepted the latter, and moved to the United States in 1958. He graduated Phi Beta Kappa from Augustana College in 1961. Tsui was the only student of Chinese descent in his college. Tsui continued his study in physics in University of Chicago, where he received his PhD in physics in 1967. Tsui did a year of postdoctoral research at Chicago. In 1968, Tsui joined Bell Laboratories where he was a pioneer in the study of two-dimensional electrons.
His discovery of the fractional quantum Hall effect, the work for which he was awarded the 1998 Nobel Prize, occurred shortly before he was appointed Professor of Electrical Engineering at Princeton University in 1982. He was also an adjunct senior research scientist in the physics department of Columbia University, and a research professor at Boston University.
Tsui is a member of the United States National Academy of Sciences, a member of the National Academy of Engineering (2004 election), a fellow of the American Association for the Advancement of Sciences, and a fellow of the American Physical Society. In 1992, Tsui was elected Academician of Academia Sinica, Taipei. In June 2000, Tsui was elected Foreign Member of Chinese Academy of Sciences, Beijing.
Daniel Tsui was previously the Arthur LeGrand Doty Professor of Electrical Engineering at Princeton University, retiring in 2010. From 2011 to 2013, he was a research professor at Boston University.