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Going to Pesth as a teacher of languages, he came under the influence of John Duncan, a Scotch Presbyterian chaplain to workmen engaged in constructing a bridge over the Danube, and was converted to Christianity. Ederaheim accompanied Duncan on his return to Scotland and studied theology at New College, Edinburgh, and at the University of Berlin.

In 1846 he was ordained to the ministry of the Presbyterian Church. He was, for a year, a missionary to the Jews at Jassy, Romania, and on his return to Scotland, after preaching for a time in Aberdeen, was installed at the Free Church, Old Aberdeen, in 1849.

In 1861 failing health forced him to resign and the Church of St. Andrew was built for him at Torquay. Then, in 1872 his health again obliged him to retire, and for four years he lived quietly at Bournemouth.

In 1875 he took orders in the Church of England, and was appointed as curate of Christchurch in Hants, England where he served for a year, and from 1876 to 1882, he was vicar of Loders, Dorsetshire, besides being Warburtonian Lecturer at Lincoln's Inn 1880-84. In 1882 he resigned his living and removed to Oxford where he was select preacher to the University 1884-85 and Grinfield Lecturer on the Septuagint 1886-88 and 1888-90. His works include History of the Jewish Nation after the Destruction of Jerusalem by Titus (Edinburgh, 1856); The Temple Its Ministry and Services at the Time of Jesus Christ (London, 1874); Bible History (7 vols., 1876-87; Jewish Social Life in the Days of Christ (1876) The Life and Times of Jesus the Messiah (2 vols., 1883; condensation in one volume, 1890), his greatest work; and Prophecy and History in Relation to the Messiah (Warburton Lectures for 1880-1884, 1885); Tohu-va-Vohu, " Without Form and Void." and A Collection of fragmentary Thoughts and Criticisms.