Dreschfeld was born in Niederwerm, Bavaria, Germany. He came to Manchester in 1861 and studied at Owens College and Manchester Royal School of Medicine. In 1864, he went to the University of Wurzburg, and in 1867, received his MD with a thesis on 'the reflex action of the vagus on blood pressure'. In 1869 he returned to Britain and took the LRCP. At first, he was in general practice in Manchester. In 1872 he was appointed honorary physician to Hulme Dispensary, and the following year became assistant physician at MRI. In 1876, he became lecturer in pathology at Owens College, and in 1881 was made professor of pathology at the College (in 1891 he was made professor of medicine). In 1883 he had become honorary surgeon at MRI.
In addition to these appointments, Dreschfeld was president of the sections of pathology and medicine of the BMA, and president of the Manchester Therapeutic Society, the Pathological Society and Manchester Medical Society in 1888. In 1886 he delivered the Bradshaw Lecture at the Royal College of Physicians. In 1906 he helped establish the Pathological Society of Great Britain and Ireland.
Dreschfeld made major contributions to the study of pathology, and published over one hundred papers. He introduced diluted eosin for staining histological sections, he produced original work on primary lateral sclerosis, pneumonia, cirrhosis of the liver, the optic nerve in the brain and on rabies. In 1882-3, following an outbreak of rabies in Manchester, Dreschfeld carried out studies of hydrophobia poisoning, he concluded that the infection was located in the spinal cords and proposed that an emulsion of infected spinal cords be injected into dogs to act as a prophylaxis. This was similar to Pasteur's work on rabies. Dreschfeld also had a long interest in diabetes, and did original work on diabetic comas.
Dreschfeld was also an active proponent of better medical education in Britain; he advocated pathologial institutes, better clinical laboratories and better equipment for medical students. Dreschfeld died in 1907. In 1908, his wife and former colleagues established the Dreschfeld scholarship at the University of Manchester, to the value of £20 and tenable by medical students.