The eldest of four children, she was born in Minneapolis, Minnesota. Her father was a chemist and her mother a social worker. Her early childhood was spent in a succession of Quaker communities in the mountains of North Carolina and in Raleigh. She didn't attend a school until she was 11, and this unorthodox upbringing enabled her to view "the normal world with a certain amount of distance and surprise."
She graduated at 19 from Duke University,where she was an AB Duke scholar, and completed graduate work in Russian studies at Columbia University in New York City. She worked as a librarian and bibliographer before moving to Maryland.
She is noteworthy among contemporary best-selling novelists, for she rarely grants face-to-face interviews or does book tours, nor does she make many other public appearances, although she has made herself available through email interviews.
Tyler's ninth novel, Dinner at the Homesick Restaurant, which she considers her best work, was a finalist for both the Pulitzer Prize and the PEN/Faulkner Award in 1983. Her tenth novel, The Accidental Tourist, was awarded the National Book Critics Circle Award in 1985, was a finalist for the Pulitzer Prize in 1986 and was made into a 1988 movie starring William Hurt and Geena Davis. Her 11th novel, Breathing Lessons, received the Pulitzer Prize in 1989, and was adapted into a 1994 TV movie. She has edited three anthologies: The Best American Short Stories 1983, Best of the South, and Best of the South: The Best of the Second Decade.
In 1963, Tyler married Iranian psychiatrist and novelist Taghi Mohammad Modarressi, with whom she had two daughters, Tezh and Mitra. Modarressi died in 1997. Tyler resides in Baltimore, Maryland, where most of her novels are set. Her daughter Mitra is an artist and book illustrator.
In a rare interview with The New York Times, Tyler cited Eudora Welty as a major literary influence: "Reading Eudora Welty when I was growing up showed me that very small things are often really larger than the large things". 
- If Morning Ever Comes (1964)
- The Tin Can Tree (1965)
- A Slipping-Down Life (1970)
- The Clock Winder (1972)
- Celestial Navigation (1974)
- Searching for Caleb (1975)
- Earthly Possessions (1977)
- Morgan's Passing (1980)
- Dinner at the Homesick Restaurant (1982)
- The Accidental Tourist (1985)
- Breathing Lessons (1988)
- Saint Maybe (1991)
- Ladder of Years (1995)
- A Patchwork Planet (1998)
- Back When We Were Grownups (2001)
- The Amateur Marriage (2004)
- Digging to America (2006)
- Noah's Compass (2010)
- The Beginner's Goodbye (2012)
- A Spool of Blue Thread
- Tumble Tower (1993) A children's book illustrated by her daughter Mitra Modarressi
- Timothy Tugbottom Says No! (2005) A children's book illustrated by Mitra Modarressi
- "Average Waves in Unprotected Waters" (1977)
- "Holding Things Together" (1977)
- "Teenage Wasteland" (2025)
- The Accidental Tourist (1988)
- Breathing Lessons (TV) (1994)
- Saint Maybe (TV) (1998)
- A Slipping-Down Life (1999)
- Earthly Possessions (TV) (1999)
- Back When We Were Grownups (TV) (2004)