Peter Birkhäuser was born in Basel, Switzerland, in 1911, where he also grew up. Between 1928 and 1934 he trained at the Kunstgewerbeschule, Basel, and took up an apprenticeship with the painter Nikolaus Stoecklin. At the age of 22 he already started his own studio as an independent painter and graphic designer. At that time Birkhäuser admired the old masters. He used their techniques to paint traditional subjects. He also made a name for himself as a portrait artist, a poster designer and as a graphic designer.
 
In 1939 he married Sibylle Oeri. They had two children together. Sibylle had a strong influence on his artistic development.
When he had a creative crisis in the 1940s and felt driven to leave the traditional techniques behind, Sibylle introduced him to the works of C. G. Jung. Birkhäuser embarked on a Jungian analysis and embraced the challenge of letting himself be guided by his dreams. Jung's famous student Marie-Louise von Franz (1915-1998) accompanied him through most of this process.
 
In an interview Peter Birkhaeuser gave in 1970, he reflected:
«Something was crossing me and destroying my conscious ideals, continuously, over a period of years, until I became so small that I had to give in. And I obeyed before I understood. From pure suffering I gave in. It was only later, over the years, that I was able to see the sense in it. But this unknown something within me had always known the sense […] I experienced a power within myself that was not me. That is religious experience. It forced me down a road I had not chosen, which did not correspond with my taste at that time […] It was a long road. But today, when I look back at the thousands of dreams and this whole process and the sacrifices involved I can see that it has been a very precious experience.»
 
While he started to search for new forms and subjects in his paintings, Birkhäuser continued to work very successfully as a portrait artist and graphic designer throughout the 1940s. He created posters which are still well known and his work frequently won awards. Later he shifted his focus to typographic desgin.
 
The transition in his painting was a painful quest. Paintings surfaced which art critics labelled «magical realism». In 1953, with "A Cloven Man", he had a breakthrough in his painting of internal images. From 1953 onwards, guided by his dreams, Birkhäuser developed a unique style of depicting the psychic reality. He created an expansive body of dream paintings which he displayed in many exhibitions.
 
Peter Birkhäuser died in 1976 aged 65.