Before obtaining her two doctorates in sacred theology and philosophy from the University of Fribourg, Switzerland, she received her B.A. in English from The College of Saint Rose, her M.A. in English from The Catholic University of America, and a doctorate in religion from St. Mary's College.

Daly taught classes at Boston College from 1967 to 1999, including courses in theology, feminist ethics, and patriarchy.

Daly was first threatened with dismissal when, following the publication of her first book, The Church and the Second Sex (1968), she was issued a terminal contract. As a result of support from the (then all-male) student body and the general public, however, Daly was ultimately granted tenure.

Daly's refusal to admit male students to some of her classes at Boston College also resulted in disciplinary action. While Daly argued that their presence inhibited class discussion, Boston College took the view that her actions were in violation of title IX of federal law requiring the College to ensure that no person was excluded from an education program on the basis of sex, and of the University's own non-discrimination policy insisting that all courses be open to both male and female students.

In 1998, a discrimination claim against the college by two male students was backed by the Center for Individual Rights, a conservative advocacy group. Following further reprimand, Daly absented herself from classes rather than admit the male students. Boston College removed her tenure rights, citing a verbal agreement by Daly to retire. She brought suit against the college disputing violation of her tenure rights and claimed she was forced out against her will, but her request for an injunction was denied by Middlesex Superior Court Judge Martha Sosman.

An out-of-court settlement was reached in which Daly agreed that she had retired from her faculty position. Daly maintained that Boston College wronged her students by depriving her of her right to teach freely to only female students. She documented her account of the events in the 2006 book, Amazon Grace: Recalling the Courage to Sin Big.

Daly protested the commencement speech of Condoleezza Rice at Boston College, and she spoke on campuses around the United States as well as internationally.

Daly published a number of works, and is perhaps best known for her second book, Beyond God the Father (1973). Beyond God the Father is the last book in which Daly really considers God a substantive subject. She laid out her systematic theology, following Paul Tillich’s example. Often regarded as a foundational work in feminist theology, Beyond God the Father is her attempt to explain and overcome androcentrism in Western religion, and it is notable for its playful writing style and its attempt to rehabilitate "God-talk" for the women's liberation movement by critically building on the writing of existentialist theologians such as Paul Tillich and Martin Buber. While the former increasingly characterized her writing, she soon abandoned the latter.

Daly’s Gyn/Ecology: The Metaethics of Radical Feminism (1978) argues that men throughout history have sought to oppress women. In this book she moves beyond her previous thoughts on the history of patriarchy to the focus on the actual practices that, in her view, perpetuate patriarchy, which she calls a religion.

Daly’s Pure Lust: Elemental Feminist Philosophy (1984) and Webster’s First New Intergalactic Wickedary of the English Language (1987) introduce and explore an alternative language to explain the process of exorcism and ecstasy. In Wickedary Daly provides definitions as well as chants that she says can be used by women to free themselves from patriarchal oppression. She also explores the labels that she says patriarchal society places on women to prolong what she sees as male domination of society. Daly said it is the role of women to unveil the liberatory nature of labels such as “Hag”, “Witch”, and “Lunatic”.

Daly's work continues to influence feminism and feminist theology, as well as the developing concept of biophilia as an alternative and challenge to social necrophilia. She was an ethical vegetarian and animal rights activist. Gyn/Ecology, Pure Lust, and Webster's First New Intergalactic Wickedary all endorse anti-vivisection and anti-fur positions. Daly was a member of the advisory board of Feminists For Animal Rights, a group which is now defunct.

Daly created her own theological anthropology based around the context of what it means to be a woman. She created a dualistic thought-praxis that separates the world into the world of false images that create oppression and the world of communion in true being. She labeled these two areas Foreground and Background respectively. Daly considered the Foreground the realm of patriarchy and the Background the realm of Woman. She argued that the Background is under and behind the surface of the false reality of the Foreground. The Foreground, for Daly, was a distortion of true being, the paternalistic society in which she said most people live. It has no real energy, but drains the “life energy” of women residing in the Background. In her view, the Foreground creates a world of poisons that contaminate natural life. She called the male-centered world of the Foreground necrophilic, hating all living things. In contrast, she conceived of the Background as a place where all living things connect.

Gyn/Ecology

Audre Lorde expressed concern over Gyn/Ecology, citing homogenizing tendencies, and a refusal to acknowledge the "herstory and myth" of women of color. The letter, and Daly's apparent decision not to publicly respond, greatly affected the reception of Daly's work among other feminist theorists, and has been described as a "paradigmatic example of challenges to white feminist theory by feminists of color in the 1980s."

Her reply letter to Ms. Lorde, dated 4½ months later, was found in 2003 in Ms. Lorde's files after she died. Ms. Daly's reply was followed in a week by a meeting with Ms. Lorde at which Ms. Daly said, among other things, that Gyn/Ecology was not a compendium of goddesses but limited to "those goddess myths and symbols that were direct sources of Christian myth," but whether this was accepted by Ms. Lorde was unknown at the time.

She argued in Gyn/Ecology for women to be the governors of men, against equality, and for reversal of power between the genders.

In an interview with What Is Enlightenment? magazine, Daly said, "I don't think about men. I really don't care about them. I'm concerned with women's capacities, which have been infinitely diminished under patriarchy. Not that they've disappeared, but they've been made subliminal. I'm concerned with women enlarging our capacities, actualizing them. So that takes all my energy."

Later in the interview, she said, "If life is to survive on this planet, there must be a decontamination of the Earth. I think this will be accompanied by an evolutionary process that will result in a drastic reduction of the population of males."

In Gyn/Ecology, Daly asserted her negative view of transsexual people, writing, "Today the Frankenstein phenomenon is omnipresent . . . in . . . phallocratic technology. . . . Transsexualism is an example of male surgical siring which invades the female world with substitutes." "Transsexualism, which Janice Raymond has shown to be essentially a male problem, is an attempt to change males into females, whereas in fact no male can assume female chromosomes and life history/experience." "The surgeons and hormone therapists of the transsexual kingdom . . . can be said to produce feminine persons. They cannot produce women."

Daly was also the dissertation advisor to Janice Raymond, whose dissertation, published in 1979 as The Transsexual Empire, is critical of "transsexualism."