Born Shirley Hardie Jackson in San Francisco, California, to Leslie and Geraldine Jackson, Shirley and her family lived in the community of Burlingame, California, an affluent middle-class suburb that would feature in Shirley's first novel The Road Through the Wall. The Jackson family then relocated to Rochester, New York, where Shirley attended Brighton High School and graduated in 1934. For college, she first attended the University of Rochester, before graduating with a BA from Syracuse University in 1940.

While a student at Syracuse, Shirley became involved with the campus literary magazine, through which she met future husband Stanley Edgar Hyman, who would become a noted literary critic. For Stanley J. Kunitz and Howard Harcraft's Twentieth Century Authors (1954), she wrote:

I very much dislike writing about myself or my work, and when pressed for autobiographical material can only give a bare chronological outline which contains, naturally, no pertinent facts. I was born in San Francisco in 1919 and spent most of my early life in California. I was married in 1940 to Stanley Edgar Hyman, critic and numismatist, and we live in Vermont, in a quiet rural community with fine scenery and comfortably far away from city life. Our major exports are books and children, both of which we produce in abundance. The children are Laurence, Joanne, Sarah and Barry: my books include three novels, The Road Through The Wall, Hangsaman, The Bird's Nest and a collection of short stories, The Lottery. Life Among the Savages is a disrespectful memoir of my children.

Although Jackson claimed to have been born in 1919 in order to appear younger than her husband, biographer Judy Oppenheimer determined that she was actually born in 1916.

The Hymans eventually settled in North Bennington, Vermont, where Stanley Hyman became a professor at Bennington College while Shirley continued to publish novels and short stories while caring for their children Laurence (Laurie), Joanne (Jannie), Sarah (Sally), and Barry. Eventually the Hyman children would come to their own brand of literary fame as fictionalised versions of themselves in their mother's short stories. The Hymans were well-known for being colorful, generous hosts who surrounded themselves with literary talents, including Ralph Ellison. Both were enthusiastic readers whose personal library was estimated at over 100,000 books.

In addition to her adult literary novels, Jackson also wrote a children's novel, Nine Magic Wishes, available in an edition illustrated by her grandson, Miles Hyman, as well as a children's play based on Hansel and Gretel and entitled The Bad Children. In a series of short stories, later collected in the books Life Among the Savages and Raising Demons, she presented a fictionalized version of her marriage and the experience of bringing up four children. These stories pioneered the "true-to-life funny-housewife stories" of the type later popularized by such writers as Jean Kerr and Erma Bombeck during the 1950s and 1960s.

In 1965, Shirley Jackson died of heart failure in her sleep, at her home in North Bennington, at the age of 48. Shirley suffered throughout her life from various neuroses and psychosomatic illnesses. These ailments, along with the various prescription drugs used to treat them, may have contributed to her declining health and early death. However, at the time of her death, Jackson was overweight and a heavy smoker. After her death, her husband released a posthumous volume of her work, Come Along With Me, containing several chapters of her unfinished last novel as well as several rare short stories (among them "Louisa, Please Come Home") and three speeches given by Jackson in her writing seminars.

With information for Jackson's debut novel, The Road Through the Wall (1948), he described Jackson as someone who practiced witchcraft. Hyman believed this image of Jackson would help promote sales of novels and film rights. She later wrote about witchcraft accusations in her book for young readers, The Witchcraft of Salem Village (1956).

Her other novels include Hangsaman (1951), The Bird's Nest (1954), The Sundial (1958) and The Haunting of Hill House (1959), regarded by many, including Stephen King, as one of the important horror novels of the 20th Century. This contemporary updating of the classic ghost story has a vivid and powerful opening paragraph:

No live organism can continue for long to exist sanely under conditions of absolute reality; even larks and katydids are supposed, by some, to dream. Hill House, not sane, stood by itself against its hills, holding darkness within; it had stood so for eighty years and might stand for eighty more. Within, walls continued upright, bricks met neatly, floors were firm, and doors were sensibly shut; silence lay steadily against the wood and stone of Hill House, and whatever walked there, walked alone.

In addition to radio, TV and theater adaptations, "The Lottery" has been filmed three times, most notably in 1969 as an acclaimed short film which director Larry Yust made for an Encyclopædia Britannica educational film series. The Academic Film Archive cited Yust's short "as one of the two bestselling educational films ever".

• Eleanor Parker starred in Hugo Haas' Lizzie (1957), based on The Bird's Nest, with a cast that included Richard Boone, Joan Blondell, Marion Ross and Johnny Mathis.
• The Haunting of Hill House was adapted to film in 1963 with Julie Harris and Claire Bloom. Liam Neeson, Lili Taylor and Catherine Zeta-Jones headed the cast of a 1999 remake.
• Jackson's 1962 novel We Have Always Lived in the Castle was adapted for the stage by Hugh Wheeler in the mid-1960s. Directed by Garson Kanin and starring Shirley Knight, it opened on Broadway October 19, 1966. The David Merrick production closed after only nine performances at the Ethel Barrymore Theatre, but Wheeler's play continues to be staged by regional theater companies.
• In 2010 We Have Always Lived in the Castle was adapted into a musical drama by Adam Bock and Todd Almond and premiered at Yale Repertory Theatre on September 17, 2010. The production was directed by Anne Kauffman and starred Alexandra Socha, Jenn Gambatese, Bill Buell, and Sean Palmer.
• Joanne Woodward directed Come Along with Me (1982), adapted from Jackson's unfinished novel, with a cast headed by Estelle Parsons and Sylvia Sidney.

In 1938, while she was studying at Syracuse, her first published story, "Janice," appeared, and the stories that followed were published in Collier's, Good Housekeeping, Harper's, Mademoiselle, The New Republic, The New Yorker, Woman's Day, Woman's Home Companion and other publications.

In 1996, a crate of unpublished stories was found in the barn behind Jackson's house. The best of those stories, along with previously uncollected stories from various magazines, were published in the 1996 collection, Just an Ordinary Day. The title was taken from one of her stories for The Magazine of Fantasy and Science Fiction, "One Ordinary Day, with Peanuts." Jackson's papers are available in the Library of Congress.

Shirley Jackson's novel Hangsaman (1951) and her short-story "The Missing Girl" (from "Just an Ordinary Day", the 1995 collection of previously unpublished and/or uncollected short-stories) both contain certain elements similar to the mysterious real-life December 1, 1946, disappearance of 18-year-old Bennington College, Vermont, sophomore Paula Jean Welden, of Stamford, Connecticut. This event, which remains unsolved to this day, took place in the wooded wilderness of the Glastenbury Mountain near Bennington in southern Vermont, where Shirley Jackson and her husband were living at the time. The fictional college depicted in Hangsaman is based in part on Jackson's experiences at Bennington College, as indicated by Jackson's papers in the Library of Congress.Donna Tartt's novel The Secret History also has a strong parallel with the Welden case.

Lenemaja Friedman's Shirley Jackson (Twayne Publishers, 1975) is the first published survey of Jackson's life and work. Judy Oppenheimer also covers Shirley Jackson's life and career in Private Demons: The Life of Shirley Jackson (Putnam, 1988). S. T. Joshi's The Modern Weird Tale (2001) offers a critical essay on Jackson's work.

A comprehensive overview of Jackson's short fiction is Joan Wylie Hall's Shirley Jackson: A Study of the Short Fiction (Twayne Publishers, 1993). The only critical bibliography of Jackson's work is Paul N. Reinsch's A Critical Bibliography of Shirley Jackson, American Writer (1919—1965): Reviews, Criticism, Adaptations (Edwin Mellen Press, 2001). Darryl Hattenhauer also provides a comprehensive survey of all of Jackson's fiction in Shirley Jackson's American Gothic (State University of New York Press, 2003). Bernice Murphy's recent "Shirley Jackson: Essays on the Literary Legacy" (McFarland, 2005) is a collection commentaries on Jackson's work.

According to the post-feminist critic Elaine Showalter, Jackson's work is the single most important mid-20th century body of literary output yet to be critically revalorized in the present day. In a March 4, 2009 podcast distributed by the renowned business publisher The Economist, Showalter also revealed Joyce Carol Oates has edited a collection of Jackson's work called "Shirley Jackson Novels and Stories" that was published in the highly-esteemed Library of America series.

The first annual Shirley Jackson Awards for "outstanding achievement in the literature of psychological suspense, horror and the dark fantastic" were presented July 20, 2008 at the Readercon Conference on Imaginative Literature in Burlington, Massachusetts. The jurors were John Langan, Sarah Langan, Paul G. Tremblay and F. Brett Cox. The winners were:

• Novel: Generation Loss by Elizabeth Hand
• Novella: "Vacancy" by Lucius Shepard
• Novelette: "The Janus Tree" by Glen Hirshberg
• Short Story: "The Monsters of Heaven" by Nathan Ballingrud
• Collection: The Imago Sequence and Other Stories by Laird Barron
• Anthology: Inferno edited by Ellen Datlow

Novels

• The Road Through the Wall (1948)
• Hangsaman (1951)
• The Bird's Nest (1954)
• The Sundial (1958)
• The Haunting of Hill House (1959)
• We Have Always Lived in the Castle (1962)

Memoirs

• Life Among the Savages (1953)
• Raising Demons (1957)

Story collections

• The Lottery and Other Stories (Farrar, Straus, 1949)
• The Magic of Shirley Jackson (Farrar, Straus, 1966)
• Come Along with Me (Viking, 1968)
• Just an Ordinary Day (Bantam, 1995)

Children's works

• The Witchcraft of Salem Village (1956)
• The Bad Children (1959)
• Nine Magic Wishes (1963)
• Famous Sally (1966)

Short stories

• "About Two Nice People," Ladies Home Journal, July 1951.
• "Account Closed," Good Housekeeping, April 1950.
• "After You, My Dear Alphonse." New Yorker, Jan 1943.
• "Afternoon in Linen." New Yorker, Sept 4, 1943.
• "All the Girls Were Dancing," Collier’s, Nov 11, 1950.
• "All She Said Was Yes," Vogue, Nov 1, 1962.
• "Alone in a Den of Cubs," Woman’s Day, Dec 1953.
• "Aunt Gertrude," Harper’s, April 1954.
• "The Bakery." Peacock Alley, Nov 1944.
• "Birthday Party." Vogue, 1 Jan 1963.
• "The Box." Woman’s Home Companion, Nov 1952.
• "Bulletin," Magazine of Science Fiction and Fantasy, Mar 1954.
• "Call Me Ishmael." Spectre, Fall 1939 v1 n1.
• "A Cauliflower in Her Hair." Mademoiselle, Dec 1944.
• "Charles," Mademoiselle, July 1948.
• "The Clothespin Dolls." Woman’s Day, Mar 1953.
• "Colloquy." New Yorker, Aug 5, 1944.
• "Come Dance with Me in Ireland." New Yorker, May 15, 1943.
• "ConcerningTomorrow." Syracusan, Mar 1939 v4 n6.
• "The Daemon Lover ['The Phantom Lover']," Woman's Home Companion, Feb 1949.
• "Daughter, Come Home." Charm, May 1944.
• "Day of Glory." Woman’s Day, Feb 1953.
• "Don’t Tell Daddy." Woman’s Home Companion, Feb 1954.
• "Every Boy Should Learn to Play the Trumpet." Woman’s Home Companion, Oct 1956.
• "Family Magician." Woman’s Home Companion, Sept 1949.
• "A Fine Old Firm." New Yorker, Mar 4, 1944.
• "The First Car is the Hardest." Harper’s, Feb 1952.
• "The Friends." Charm, Nov 1953.
• "The Gift." Charm, Dec 1944.
• "A Great Voice Stilled," Playboy, Mar 1960.
• "Had We but World Enough." Spectre, Spring 1940 v1 n3.
• "Happy Birthday to Baby." Charm, Nov 1952.
• "Home." Ladies Home Journal, Aug 1965.
• "The Homecoming." Charm, April 1945.
• "The House." Woman’s Day, May 1952.
• ”An International Incident.” New Yorker, Sept 12, 1943.
• "The Island." New Mexico Quarterly Review, 1950 v3.
• ”It Isn’t the Money.” New Yorker, Aug 25, 1945.
• "It’s Only a Game." Harper’s, May 1956.
• "Journey with a Lady." Harper’s, July 1952.
• "Liaison a la Cockroach." Syracusan, April 1939 v4 n7.
• "Little Dog Lost." Charm, Oct 1943.
• "A Little Magic." Woman’s Home Companion, Jan 1956.
• "Little Old Lady." Mademoiselle, Sept 1944.
• "The Lottery." New Yorker, June 26, 1948.
• "Louisa, Please." Ladies’ Home Journal, May 1960.
• "The Lovely Night." Collier’s, 8 April 1950.
• "Lucky to Get Away." Woman’s Day, Aug 1953.
• "Men with Their Big Shoes," Yale Review, Mar 1947
• "The Missing Girl," Magazine of Fantasy and Science Fiction, Dec 1957.
• "Monday Morning." Woman’s Home Companion, Nov 1951.
• "The Most Wonderful Thing." Good Housekeeping, June 1952.
• "Mother is a Fortune Hunter." Woman’s Home Companion, May 1954.
• "Mrs. Melville Makes a Purchase." Charm, Oct 1951.
• "My Friend." Syracusan, Dec 1938 v4 n4.
• "My Life in Cats." Spectre, Summer 1940 v1 n4.
• "My Life with R.H. Macy." New Republic, 22 Dec 1941.
• "My Son and the Bully." Good Housekeeping, Oct 1949.
• "Nice Day for a Baby." Woman’s Home Companion, July 1952.
• "Night We All Had Grippe." Harper’s, Jan 1952.
• "Nothing to Worry About." Charm, July 1953.
• "The Omen," Magazine of Fantasy and Science Fiction, Mar 1958.
• "On the House." New Yorker, Oct 30, 1943.
• "One Last Chance to Call." McCall’s, April 1956.
• "One Ordinary Day, With Peanuts," Magazine of Fantasy and Science Fiction, Jan 1955.
• "The Order of Charlotte’s Going." Charm, July 1954.
• "Pillar of Salt" Mademoiselle, Oct 1948.
• "The Possibility of Evil," The Saturday Evening Post, Dec 18, 1965.
• "Queen of the May." McCall’s, April 1955.
• "The Renegade," Harper's, Nov 1949.
• "Root of Evil." Fantastic, March—April 1953.
• "The Second Mrs. Ellenoy." Reader’s Digest, July 1953.
• "Seven Types of Ambiguity," Story, 1943.
• "Shopping Trip." Woman’s Home Companion, June 1953.
• "The Sneaker Crisis." Woman’s Day, Oct. 1956.
• "So Late on Sunday Morning." Woman’s Home Companion, Sept 1953.
• "The Strangers." Collier’s, 10 May 1952.
• "Strangers in Town." Saturday Evening Post, 30 May 1959.
• "The Summer People," Charm, 1950.
• "The Third Baby’s the Easiest." Harper’s, May 1949.
• "The Tooth." The Hudson Review, 1949 v1 n4.
• "Trial by Combat." New Yorker, Dec 16, 1944.
• "The Villager," The American Mercury, Aug 1944.
• "Visions of Sugarplums." Woman’s Home Companion, Dec 1952.
• "When Things Get Dark." New Yorker, Dec 30, 1944.
• "Whistler’s Grandmother." New Yorker, May 5, 1945.
• "The Wishing Dime." Good Housekeeping, Sept 1949.
• "Worldly Goods." Woman’s Day, May 1953.
• "Y and I." Syracusan, Oct 1938 v4 n2.
• "Y and I and the Ouija Board." Syracusan, Nov 1938 v4 n3.
• "The Witch." 1949.