McCarthy edited Isaac Asimov's Science Fiction Magazine from 1983 until 1985, taking over the helm from Kathleen Moloney and being succeeded by Gardner Dozois. During her time at Asimov's, McCarthy edited four anthologies of stories from the magazine (Isaac Asimov's Wonders of the World (1982), Isaac Asimov's Aliens & Outworlders (1983), Isaac Asimov's Space of Her Own (1984) and Isaac Asimov's Fantasy! (1985)), and received the Hugo Award for Best Professional Editor once (being nominated for it a total of three times).
After leaving Asimov's, McCarthy became an editor for Bantam from 1985 until 1988 and co-edited the first two volumes of that publisher's Full Spectrum anthology series with Lou Aronica, et al. Upon leaving Bantam, she began working as a literary agent, first with Scott Meredith, then with Scovil Chichak Galen, and now as an independent. In addition, she was the fiction editor of Realms of Fantasy magazine from its debut in 1994 until its closure after the October 2011 issue.