Susan Hill was born in Scarborough, North Yorkshire in 1942. Her hometown was later referred to in her novel A Change for the Better (1969) and some short stories especially "Cockles and Mussels".

She attended Scarborough Convent School, where she became interested in theatre and literature. Her family left Scarborough in 1958 and moved to Coventry where her father worked in car and aircraft factories. Hill states that she attended a girls’ grammar school, Barr's Hill. Her fellow pupils included Jennifer Page, the first Chief Executive of the Millennium Dome. At Barrs Hill she took A levels in English, French, History and Latin, proceeding to an English degree at King's College London. By this time she had already written her first novel, The Enclosure which was published by Hutchinson in her first year at university. The novel was criticised by The Daily Mail for its sexual content, with the suggestion that writing in this style was unsuitable for a "schoolgirl".

Her next novel Gentleman and Ladies was published in 1968. This was followed in quick succession by A Change for the Better, I'm the King of the Castle, The Albatross and other stories, Strange Meeting, The Bird of Night, A Bit of Singing and Dancing and In the Springtime of the Year, all written and published between 1968 and 1974.

In 1975 she married Shakespeare scholar Stanley Wells and they moved to Stratford upon Avon. Their first daughter, author Jessica Ruston, was born in 1977 and their second daughter, Clemency, was born in 1985. Hill has recently founded her own publishing company, Long Barn Books, which has published one work of fiction per year.

Hill's novels are written in a descriptive gothic style, especially her ghost story The Woman in Black which was written in 1982. She has expressed an interest in the traditional English ghost story which relies on suspense and atmosphere to create its impact, similar to the classic ghost stories by Montague Rhodes James and Daphne du Maurier. The novel was turned into a play in 1987 and continues to run in the West End of London, joining the group of plays that have run for over twenty years. It was also filmed for a TV movie in 1989. She wrote another ghost story with similar ingredients, The Mist in the Mirror in 1992, and a sequel to du Maurier's Rebecca entitled Mrs De Winter in 1993.

Since 2004, Hill has begun a series of crime novels featuring Detective Simon Serailler, entitled The Various Haunts of Men (2004), The Pure in Heart (2005), The Risk of Darkness (2006), The Vows of Silence (2009) and The Shadows in the Street (2010).