McGrath was born in Chicago, Illinois, and grew up in Washington, D.C., where he attended Sidwell Friends School. He received his B.A. from the University of Chicago in 1984 and his MFA from Columbia University's creative writing program in 1988, where he was classmates with Rick Moody. He currently lives in Miami, Florida, and teaches creative writing at Florida International University, where his students have included Richard Blanco. He is married to Elizabeth Lichtenstein, whom he met while he was an undergraduate; they have two sons.

In the early 1980s, while a student at the University of Chicago, he was a member of the punk band Men From The Manly Planet.

McGrath has been recognized by some of the most prestigious American poetry awards, including the Kingsley Tufts Poetry Award (for The Bob Hope Poem in Spring Comes to Chicago, his third book of poems), a Pushcart Prize, the Academy of American Poets Prize, a Ploughshares Cohen Award, a Guggenheim Fellowship, a Witter-Bynner Fellowship from the Library of Congress, and a MacArthur Foundation "Genius Award."