Dunbar was born in Cotswolds and moved to Stratford upon Avon when she was an eight-month-old. She went to school there until she was at age eleven and moved to Norwich with her family. There she attended City of Norwich School and Norwich Art school, now known as Norwich University College of the Arts . She started writing and illustrating at age 16, when she published two books - which she describes as "cartoon books inspired by teenage antics". She went to Brighton university and graduated in 1999 with a degree in illustration.

As of February 2008, Dunbar lives in Brighton, England.

Dunbar published Dog Blue and Flyaway Katie in 2004. The following year, she co-operated with her mother, author Joyce Dunbar, to produce the picture book Shoe Baby. Dunbar's 2007 book Penguin is her most critically-successful book to date, winning the Booktrust Early Years Awards in pre-school category. and the silver award in the Nestle Children's Book Prize for children under five years old. Dunbar is also the illustrator for Here's A Little Poem which is on the IBBY honour's book list for 2008.

Polly Dunbar was name "Most promising new illustrator" in Publisher Weekly 's Cuffie Awards in 2004. In 2008, she is featured in The Times's list of "The best new picture book illustrators".