He was born at Hersham, near Walton-on-Thames. He was educated at Blackheath and at Trinity College, Cambridge, where he took a high place in the classical tripos and obtained a fellowship. His work for the tripos was done, said his friend F. W. H. Myers, in the intervals of his practice on the piano. Dissatisfied with his own executive skill as a musician, he wrote The Power of Sound (1880), an essay on the philosophy of music.
He then studied medicine with no intention of practising, devoting himself to physics, chemistry and physiology. In 1880 he passed the second M.B. Cambridge examination. in the science of the healing profession. In relation to Psychical Research, he asked whether there is an unexplored region of human faculty transcending the normal limitations of sensible knowledge. Gurney's purpose was to approach the subject by observation and experiment, especially in the hypnotism field. He wanted to investigate the persistence of the conscious human personality after the death of the body.
Gurney began at what he later saw was the wrong end by studying, with Myers, the séances of professed spiritualistic mediums (1874–1878). Little but detection of imposture came of this. In 1882 the Society for Psychical Research was founded. Paid mediums were discarded, at least for the time, and experiments were made in thought-transference and hypnotism. Personal evidence as to uninduced hallucinations was also collected.
The first results are embodied in the volumes of Phantasms of the Living, a vast collection (Frank Podmore, Myers and Gurney), and in Gurney's essay, Hallucinations. Evidence for the process called telepathy was supposed to be established by the experiments chronicled in the Proceedings of the Society for Psychical Research, and it was argued that similar experiences occurred spontaneously, as, for example, in the many recorded instances of deathbed wraiths. The dying man was supposed to convey the hallucination of his presence as one living person experimentally conveys his thought to another, by thought-transference.
Gurney's hypnotic experiments were undertaken in the years 1885 to 1888. Their tendency was, in Myers's view, to prove that there is sometimes, in the induction of hypnotic phenomena, some agency at work which is neither ordinary nervous stimulation nor suggestion conveyed by any ordinary channel to the subject's mind. These results, if accepted, would corroborate the idea of telepathy. Experiments by Joseph Gibert, Paul Janet, Charles Richet, Méricourt and others were cited as tending in the same direction.
Other experiments dealt with the relation of the memory in the hypnotic state to the memory in another hypnotic state, and of both to the normal memory. Gurney's research into psychic matters was respected by contemporaries. However, it has since then been argued to be deeply flawed, in the study of his death "by misadventure", The Strange Case of Edmund Gurney, by Trevor Hall. Hall, a student of the work by the Society for Psychical Research, discovered that Gurney trusted in the assistance of one George Albert Smith, a theatrical producer. Smith was the one handling the actual experiments into telepathy, hypnotism, and the rest, and Gurney fully accepted his results. According to Hall, in the spring of 1888 Gurney discovered that Smith had used his knowledge of theatrical trickery and stage illusion to fake tests and results; so that the value of the tests (with which Gurney was building up his reputation) were worthless.
See also the Palm Sunday Case
He died at Brighton on 23 June 1888, from the effects of an overdose of narcotic medicine, thought to be chloroform. Trevor Hall has argued that Gurney's death was suicide: Gordon Epperson argues against this hypothesis.
In addition to his work on music and his psychological writings, he was the author of Tertium Quid (1887), a collection of essays, on the whole a protest against one-sided ideas and methods of discussion.