Following her undergraduate studies in English Literature at the University of Kent, she went on to obtain an M.A. at Lancaster University and a Ph.D at Queen Mary College, London. She has also worked as an associate lecturer with the Open University.
Following the publication of her first novel Tipping the Velvet in 1998, she went on to publish five further novels: Affinity (1999), Fingersmith (2002), The Night Watch (2006), The Little Stranger (2009), and The Paying Guests (2014) .
Her work has generated significant interest, and Waters has won numerous awards, including the Betty Trask Award, the Somerset Maugham Award, Waterstone's Booksellers Author of the Year award, Granta's Best of Young British Novelists award, Glamour Magazine Writer of the Year Award and the Casino De Santiago European Novel Award. She has also been nominated on several occasions for the Man Booker Prize and the Orange Prize for Fiction. In 2009, she was made a Fellow of the Royal Society of Literature.
Her first three novels have been adapted for television, and plans are afoot to adapt The Night Watch and The Little Stranger for television and film respectively.
Most of Waters' novels feature lesbian characters and themes, and she has stated publicly that she is comfortable with her designation as a lesbian writer.
She lives in south London.