Born Angela Olive Stalker in Eastbourne, in 1940, Carter was evacuated as a child to live in Yorkshire with her maternal grandmother. As a teenager, she battled anorexia. She at first worked as a journalist on the Croydon Advertiser, following in the footsteps of her father who was also a journalist. Carter attended the University of Bristol where she studied English literature.

Carter’s writings show the influence of her mother. This influence can be seen in her novel Wise Children, which is notable for its many Shakespearean references. Carter was also interested in reappropriating writings by male authors, such as the Marquis de Sade (see The Sadeian Woman) and Charles Baudelaire (see her short story 'Black Venus'), amongst other literary forefathers. But she was also fascinated by the matriarchal, oral, storytelling tradition, rewriting several fairy tales for her short story collection The Bloody Chamber, including "Little Red Riding Hood", "Bluebeard," and two reworkings of "Beauty and the Beast."

She married twice, the first time in 1960 to a man named Paul Carter. They divorced after twelve years. In 1969 Angela Carter used the proceeds of her Somerset Maugham Award to leave her husband and travel to Japan, living in Tokyo for two years, where, she claims, she "learnt what it is to be a woman and became radicalised" (Nothing Sacred (1982)). She wrote about her experiences there in articles for New Society and a collection of short stories, (1974), and evidence of her experiences in Japan can also be seen in The Infernal Desire Machines of Doctor Hoffman (1972). She was there at the same time as Roland Barthes, who published his experiences in Empire of Signs (1970).

She then explored the United States, Asia and Europe, helped by her fluency in French and German. She spent much of the late 1970s and 1980s as a writer in residence at universities, including the University of Sheffield, Brown University, the University of Adelaide, and the University of East Anglia. In 1977, Carter married again, to her second husband, Mark Pearce.

As well as being a prolific writer of fiction, Carter contributed many articles to The Guardian, The Independent and New Statesman, collected in Shaking a Leg. She also wrote for radio, adapting a number of her short stories for the medium, and two original radio dramas on Richard Dadd and Ronald Firbank. Two of her fictions have been adapted for the silver screen: The Company of Wolves (1984) and The Magic Toyshop (1987). She was actively involved in the adaptation of both films, her screenplays for which are published in the collected dramatic writings, The Curious Room, together with her radioplay scripts, a libretto for an opera of Virginia Woolf's Orlando, an unproduced screenplay entitled The Christchurch Murders (based on the same true story as Peter Jackson's Heavenly Creatures), and other works. These neglected works, as well as her her controversial television documentary, The Holy Family Album, are discussed in Charlotte Crofts' book, Anagrams of Desire (2003).

Her novel Nights at the Circus won the 1984 James Tait Black Memorial Prize for literature.

Angela Carter died aged 51 in 1992 after developing cancer. Below is an extract from her obituary published in The Observer:

"She was the opposite of parochial. Nothing, for her, was outside the pale: she wanted to know about everything and everyone, and every place and every word. She relished life and language hugely, and revelled in the diverse."