Cooney was born on 6 August 1917 in Room 1127 of the Hotel Bossert in Brooklyn, New York, to Russell Schenck Cooney (a stockbroker) and Mae Evelyn Bossert (a painter). She had a twin brother and two younger brothers. She attended Buckley Country Day School and later Boarding School.

She later graduated from Smith College with a history degree, and her first book illustrated, Ake and His World, by the Swedish poet Bertil Malmberg, was published a year after graduation. During World War II, she served in the Women’s Army Corps. Soon after her service, she met and married Guy Murchie(Jr), in 1944 and had two children (Gretel and Barnaby.) She later divorced, and remarried Charles Talbot Porter in July 1949 and had two more children (Charles and Phoebe.)

Ten years later, she won her first Caldecott for Chanticleer and the Fox, a book that she illustrated and adapted the text from Chaucer. Between then and when she picked the other Caldecott in 1980 for Ox-Cart Man (written by Donald Hall), she traveled a lot, picking up ideas to draw and, occasionally, write. In 1982 she won the National Book Award for Miss Rumphius. In 1996, Maine Governor Angus King honored Miss Cooney by proclaiming the day "Barbara Cooney Day". Her last book, Basket Moon, was published six months before her 10 March 2000 death at a house that her son built for her in Damariscotta, Maine.

Portions of her original artwork are being displayed at Bowdoin College.

Throughout her career, Cooney used a variety of techniques, most used being pen and ink, acrylic paints, and pastels. Her illustrations are often described as folk art, and most of her stories that she chose to illustrate were folk stories. While many of her books were in black and white, her "heart and soul are in color".

• On her grandmother and mother: "She gave me all the materials I could wish for and then left me alone, didn’t smother me with instruction. Not that I ever took instruction very easily. My favorite days were when I had a cold and could stay home from school and draw all day long.... She was an enthusiastic painter of oils and watercolors. She was also very generous. I could mess with her paints and brushes all I wanted. On one condition: that I kept my brushes clean. The only art lesson my mother gave me was how to wash my brushes. Otherwise, she left me alone."

• On her graduation from Smith College: "I have felt way behind technically; and what I’ve learned I have had to teach myself. To this day, I don’t consider myself a very skillful artist."

• On her travels: “It was not until I was in my forties, in the fifth decade of my life, that the sense of place, the spirit of place, became of paramount importance to me. It was then that I began my travels, that I discovered, through photography, the quality of light, and that I gradually became able to paint the mood of place.”

• On her receiving the Caldecott Medal in 1959: "I believe that children in this country need a more robust literary diet than they are getting.... It does not hurt them to read about good and evil, love and hate, life and death. Nor do I think they should read only about things that they understand.... a man’s reach should exceed his grasp. So should a child’s. For myself, I will never talk down to...or draw down to...children."

• On her most favorite works: "Of all the books I have done, Miss Rumphius, Island Boy, and Hattie and the Wild Waves, are the closest to my heart. These three are as near as I ever will come to an autobiography".