Born in Baidoa, Somalia, Farah is the son of a merchant father and a poet mother. As a child, he attended school at Kallafo in the Ogaden, and studied English, Arabic, and Amharic. In 1963, three years after Somalia's independence, Farah was forced to flee the Ogaden following serious border conflicts. For several years thereafter, he pursued a degree in philosophy, literature and sociology at Panjab University in Chandigarh, India.

After releasing an early short story in his native Somali language, Farah shifted to writing in English while still attending university in India. His first novel, From a Crooked Rib (1970), told the story of a nomad girl who flees from an arranged marriage to a much older man. The novel earned him mild but international acclaim. On a tour of Europe following the publication of A Naked Needle (1976), Farah was warned that the Somali government planned to arrest him over its contents. Rather than return and face imprisonment, Farah began a self-imposed exile that would last for twenty-two years, teaching in the United States, Germany, Italy, Sweden, Sudan, India and Nigeria. In 1990, he received a grant from the German Academic Exchange Service and moved to Berlin. In 1996, he visited Somalia for the first time in more than twenty years. He lives with his second wife and two children in Cape Town.

Farah describes his purpose for writing as an attempt "to keep my country alive by writing about it". His trilogies of novels Variations on the Theme of an African Dictatorship (1980-1983) and Blood in the Sun (1986-1999) form the core of his work. Though Variations was well-received in a number of countries, Farah's reputation was cemented by his most famous novel, Maps (1986), the first part of his Blood in the Sun trilogy. Maps, which is set during the Ogaden conflict of 1977, employs the innovative technique of second-person narration for exploring questions of cultural identity in a post-independence world. He followed the novel with Gifts (1993) and Secrets (1998), both of which earned awards.

Farah has garnered acclaim as one of the greatest contemporary writers in the world. Having published many short stories, novels and essays, his prose has earned him, among other accolades, the Premio Cavour in Italy, the Kurt Tucholsky Prize in Sweden, the Lettre Ulysses Award in Berlin, and in 1998, the prestigious Neustadt International Prize for Literature. In the same year, the French edition of his novel Gifts also won the St. Malo Literature Festival’s prize. In addition, Farah is a perennial nominee for the Nobel Prize in Literature, which is one of the only major literary prizes he has yet to win.