Atkinson was born in York, the daughter of a shopkeeper - York becoming the scene of several of her books. She studied English literature at the University of Dundee, gaining her master's degree in 1974. Atkinson subsequently studied for a doctorate in American literature, entitled "The post-modern American short story in its historical context". She has often spoken publicly that she failed at the viva (oral examination) stage. After leaving the university, she took on a variety of jobs from home help to legal secretary and Teacher.
Her first novel, Behind the Scenes at the Museum, won the 1995 Whitbread Book of the Year and went on to be a Sunday Times bestseller. Since then, she has published another nine novels, one play, and one collection of short stories. A series of four novels, starting with Case Histories, has featured the character of Jackson Brodie as a private investigator and former police inspector.
In 2009, she donated the short story "Lucky We Live Now" to Oxfam's Ox-Tales project, four collections of UK stories written by 38 authors. Atkinson's story was published in the Earth collection.
In March 2010, Atkinson appeared at the York Literature Festival, giving a world-premier reading from an early chapter from her novel Started Early, Took My Dog (2010), which is set mainly in the English city of Leeds.
Atkinson was appointed a Member of the Order of the British Empire (MBE) in the 2011 Birthday Honours for services to literature.
Her work is often celebrated for its wit, wisdom and subtle characterisation, and the surprising twists and plot turns. She has frequently criticised the media's coverage of her work – when she won the Whitbread award, for Example, it was the fact that she was a "single mother" who lived outside London that received the most attention.
In 2015 in the United States, Shonda Rhimes was in the process of developing a pilot called The Catch, based on a treatment written by Atkinson, and starring Mireille Enos.