Hambly was born in San Diego, California and grew up in Montclair, California. Her parents, Edward Everett Hambly Sr. and Florence Moraski Hambly, are from a coal-mining town in eastern Pennsylvania. She has an older sister, Mary Ann Sanders, and a younger brother, Edward Everett Hambly Jr. In her early teens, Hambly read and was transfixed by J. R. R. Tolkien's The Lord of the Rings, and affixed images of dragons to her bedroom door. She early-on became interested in costumery, and has been a long-time participant in Society for Creative Anachronism activities. In the mid-1960s, the Hambly family spent a year in Australia.

Hambly has a Masters in Medieval History from the University of California at Riverside, completing her degree in 1975 and spending a year in Bordeaux as part of her studies. Her first novel to be published was Time of the Dark in 1982 by Del Rey. Previous to becoming a writer, Hambly chose occupations that allowed her time to write; all of her novels contain a biography paragraph with a litany of jobs familiar to her readers - high school teacher, model, waitress, technical editor, all-night liquor store clerk, and Shotokan karate instructor. Hambly served as President of the Science Fiction and Fantasy Writers of America from 1994 to 1996. Her works have been nominated for many awards in the fantasy and horror fiction categories, winning a Locus Award for Best Horror Novel Those Who Hunt the Night (1989) (released in the UK as Immortal Blood) and the Lord Ruthven award for fiction for its sequel, Travelling With the Dead (1996).

Hambly was married for some years to fellow science fiction writer George Alec Effinger before his death in 2002. She now lives in Los Angeles. Hambly speaks freely of suffering from seasonal affective disorder, which was undiagnosed for years.

Given Hambly's diverse portfolio, there are only a few themes that run throughout all of her novels.

She has a penchant for unusual characters within the fantasy genre, such as the menopausal witch and reluctant scholar-lord in the Winterlands trilogy, or philologist secret service agent in the vampire novels.

Her writing is filled with rich descriptions and actors whose actions bear consequences for both their lives and relationships, suffusing her series with a sense of loss and regret; Hambly's characters experience the pain of frustrated aspirations to a degree that is uncommon in most fantasy novels.

Though using many standard clichés and plot devices of the fantasy genre, her works depart from the norm through an exploration of the ethical implications of the consequences of these devices, and what their impact is for the characters, were they real people. In avoiding the "...easy consolatory self-identification of genre fantasy" (p. 449) and refusing to let her work be guided more explicitly by conventions and the desires of her audience, Hambly may have missed out on the remunerative success and acclaim that she is due.

Although magic exists in many of her settings, it is not used as an easy solution but follows rules and takes energy from the wizards. The unusual settings are generally rationalized as alternative universes.

Hambly heavily researches her settings, either in person or through books, frequently drawing upon her degree in medieval history for background and depth.

Darwarth

The Darwath Trilogy

• The Time of the Dark (1982)
• The Walls of Air (1983)
• The Armies of Daylight (1983)

Standalone Darwath Novels

• Mother of Winter (1996; Locus award nominee 1997)
• Icefalcon's Quest (1998)

Sun Wolf and Starhawk

• The Ladies of Mandrigyn (1984; Locus award nominee, 1985)
• The Witches of Wenshar (1987; Locus award nominee, 1988)
• The Dark Hand of Magic (1990)

Winterlands

• Dragonsbane (1985; Locus award nominee, 1986 and 1987)
• Dragonshadow (1999; Locus award nominee, 2000)
• Knight of the Demon Queen (2000; Locus award nominee, 2001)
• Dragonstar (2002)

The Windrose Chronicles

• The Silent Tower (1986)
• The Silicon Mage (1988)
• Dog Wizard (1993; Locus award nominee, 1994)
• Stranger at the Wedding/Sorcerer's Ward (1994)

Star Trek Universe

• Ishmael (1985)
• Ghost-Walker (1991)
• Crossroad (1994)

Vampire Novels

• Those Who Hunt The Night / Immortal Blood (UK title) (1988; Locus award winner for Best Horror Novel in 1989)
• Traveling With The Dead (1995; Locus award nominee, 1996, winner of the Lord Ruthven award, 1996)

Beauty and the Beast

• Beauty and the Beast novelisation (1989)
• Song of Orpheus (1990)

Sun-Cross

• The Rainbow Abyss (1991; Locus award nominee, 1992)
• The Magicians of Night (1992; Locus award nominee, 1993)

Star Wars Universe

• Children of the Jedi (1995)
• Planet of Twilight (1997)

The Benjamin January Mysteries

The series beginning with 'A Free Man of Color' follows Benjamin January, a brilliant, classically educated free colored surgeon and musician living in New Orleans during the belle epoque of the 1830s, when New Orleans had a large and prosperous free colored demimonde. January was born a slave but freed as a young child and provided with an excellent education; he is fluent in several classical and modern languages and thoroughly versed in the whole of classical Western learning and arts. Although trained in Paris as a surgeon, he has returned to Louisiana to escape the memory of his dead Parisian wife. As he is a very dark-skinned black man, in Louisiana he cannot find work as a surgeon. Instead, he earns a modest living by his exceptional talent and skill as a musician.

Each title is an entertaining murder mystery with a complex plot and well-developed characters, and each explores many aspects of French Creole society. However, most tend to emphasize some particular element of antebellum Louisiana life, such as Voodoo religion (Graveyard Dust), opera and music (Die Upon a Kiss), the annual epidemics of yellow fever and malaria (Fever Season), fear of miscegenation (Dead and Buried), or the harsh nature of commercial sugar production (Sold Down the River).

Important themes running throughout the series are 1) the cultural clash between the rising protestant English-speaking Anglo-Americans on the one hand and the declining Catholic, French-speaking Creoles on the other, 2) the extreme regard of Creole society for "how" colored a person is (quite alien to modern readers), 3) January's bitterness at the many forms of racial injustice he observes, 4) the complex, partially race-based sexual politics of colonial French society, and 5) January's ongoing attempts to balance the primal, open, and frank African outlook acquired in his early childhood with the more restrained and rational European worldview he now holds. This last theme occurs most often with respect to music, spirituality, and respect for law and social custom.

• A Free Man of Color (1997)
• Fever Season (1998)
• Graveyard Dust (1999)
• Sold Down the River (2000)
• Die upon a Kiss (2001)
• Wet Grave (2002)
• Days of the Dead (2003)
• Dead Water (2004)
• Dead and Buried (2010)

Raven Sisters

• Sisters of the Raven (2002)
• Circle of the Moon (2005)

Standalone novels

• Bride of the Rat God (1994; Locus award nominee, 1995)
• Magic Time (2002) (with Marc Zicree)
• Renfield (2006)

Historical fiction

• Search the Seven Hills [originally The Quirinal Hill Affair] (1983)
• The Emancipator's Wife (2005; finalist for the Michael Shaara Prize for Excellence in a Civil War Novel, 2006)
• Patriot Hearts (2007)