After completing his MD degree, Dr. Gustafsson was appointed Associate Professor of Chemistry at the Karolinska Institute in 1971, and was made full professor in 1976. In 1979, he was named Professor of Medical Nutrition and Chairman of the Department of Medical Nutrition at Huddinge University Hospital at the Karolinska Institute. In 1987, together with Dr. John Baxter, founded Karo Bio, a campus-situated biotechnology company with approximately 80 employees, to develop and commercialize products to treat human diseases such as obesity, diabetes, metabolic syndrome, and breast cancer. He is a member of the U.S. National Academy of Sciences, has published more than 1,300 peer-reviewed journal articles, and has trained over 200 Ph.D. students, post doctoral fellows, and visiting scientists. He was appointed Director of The Center for Nuclear Receptors and Cell Signaling at the University of Houston, with a joint appointment at Houston Methodist Research Institute, in 2009.

Nuclear receptors are proteins embedded in the cell nucleus that bind hormones and influence gene expression. Dr. Gustafsson and his research team discovered a novel nuclear receptor (estrogen receptor beta, ER-β) that plays a role in several human diseases including breast, ovarian, and prostate cancer. The goal of his research is to develop small molecule modulators of this and other hormone receptors to treat human disease.