In 1921, Bayer enrolled as a student at the Bauhaus in Weimar, where he studied under Wassily Kandinsky and later under Lazlo Moholy-Nagy. Following the closing of the Bauhaus, arrangements were made to transfer the school to Dessau, and in 1925 Bayer and five other former students including Marcel Breuer, Joost Schmidt, and Josef Albers were appointed teachers.

As an educator, he transformed the Bauhaus by eliminating the use of lithography and woodcuts and introducing movable type and mechanical presses to the Dessau workshops. The use of serif, black letter, and capital letterform ended; the use of sans serif, lowercase letterforms began. Typographic form was now asymmetric, simple, and direct. During his years at Dessau, Bayer had been strongly influenced by Moholy-Nagy's enthusiasm for photography as a contemporary means of visual communication and started to experiment with various photographic techniques including collage, photomontage, and light.

Bayer's most original use of light (and shadow) was with his photomontage for the 1928 cover of the bauhaus zeitschrift. In this memorable composition, he uses light in a dramatic and striking manner. Additionally, Bayer makes use of a cube, ball, and cone (solidifications of Kandinsky's iconic square, circle, and triangle) along with sharpened pencil and transparent triangle juxtaposed over the surface of the magazine's cover. This image, classically simple and evocative, was one of the most widely produced examples of Bayer's graphic design. It not only identified the publication in a provocative manner, but it fully communicated the essence and philosophy of the Bauhaus and its avant-garde educational programs. Bayer left the Bauhaus in 1928 and relocated to Berlin.

In 1938, like many artists and designers in Germany at the time, he fled the Nazis and immigrated to the United States, where he became a self-appointed spokesperson for the Bauhaus movement.