Born in Limerick, Barry spent much of his youth travelling, living in 17 addresses by the time he was 36. He lived variously in Cork, Santa Barbara, Barcelona, and Liverpool before settling in Sligo, purchasing and renovating a run-down Royal Irish Constabulary barracks. His decision to settle down was driven primarily by the increasing difficulty in moving large quantities of books from house to house. In Cork Barry worked as a freelance journalist, contributing a regular column to the Irish Examiner. Keen to become a writer, he purchased a caravan and parked it in a field in West Cork, spending the next six months writing what he described as a "terrible novel'.
Barry has described himself as "a raving egomaniac", one of those "monstrous creatures who are composed 99 per cent of sheer, unadulterated ego" and "hugely insecure and desperate to be loved and I want my reader to adore me, to a disturbing, stalkerish degree." He is highly ambitious, saying: "I won't be happy until I'm up there, receiving the Nobel Prize." He confessed to "haunting bookshops and hiding" to "spy on the short fiction section and see if anyone's tempted by my sweet bait" and has also placed copies of his own work in front of books by other "upcoming" authors.
In 2007 he won the Rooney Prize for Irish Literature for his short story collection There are Little Kingdoms. In 2011 he released his debut novel City of Bohane, which was followed in 2012 by the short story collection Dark Lies the Island. Barry won the International Dublin Literary Award for his novel City of Bohane in 2013. When City of Bohane was shortlisted for the award in April 2013, Barry said: "Anything that keeps a book in the spotlight, and keeps people talking about books is good. [...] And a prize with money attached to it has a lot of prestige." He received €100,000 for winning the award. The prize jury included Salim Bachi, Krista Kaer, Patrick McCabe, Kamila Shamsee, Clive Sinclair and Eugene R. Sullivan.Lord Mayor of DublinNaoise Ó Muirí said he was "thrilled" that someone of "such immense talent [should] take home this year's award". Ó Muirí also said the characters were "flamboyant and malevolent, speaking in a vernacular like no other." In November, 2015 Beatlebone won the £10,000 Goldsmith’s Prize that aims to reward British and Irish fiction that breaks the mould or extends the possibilities of the novel form.