McDermid comes from Kirkcaldy, Fife and was educated at St Hilda's College, Oxford, where she was the first student from a state school in Scotland (Kirkcaldy High School), and became President of the Junior Common Room. After graduation she became a journalist, and worked briefly as a dramatist. However, her first success as a novelist, Report for Murder: The First Lindsay Gordon Mystery, did not appear until 1987.
McDermid's notable characters are a lesbian journalist, Lindsay Gordon; a private investigator, Kate Brannigan; and a psychologist, Tony Hill, who suffers from sexual dysfunction. Her books mainly fall into three series: Lindsay Gordon, Kate Brannigan, and, beginning in 1995, the Tony Hill and Carol Jordan series, the first entry in which, The Mermaids Singing, won the Crime Writers' Association Gold Dagger for Best Crime Novel of the Year. The Hill/Jordan series has been adapted for television under the name Wire in the Blood, starring Robson Green. It is stated that Harper Lee's "To Kill A Mockingbird" is her favourite novel.
McDermid considers her work to be Tartan Noir. As well as her novels, McDermid contributes to several British newspapers and often broadcasts on BBC Radio 4 and BBC Radio Scotland.
Her novels, in particular the Tony Hill series, are known for their graphic depictions of violence and torture.
The McDermid Stand is a football stand in Stark's Park (of Raith Rovers), Kirkcaldy which she sponsors. She often invests in billboards there for her newest books. This endeavor was made due to a childhood supporting of the club, her local team, and her father's employers.
McDermid is a lesbian. She and her former girlfriend share custody of their son Cameron (conceived to McDermid's ex via donor insemination). She is a Raith Rovers supporter. She lives in Manchester and Northumberland with three cats.