Velma Nacella Young was born in rural Illinois and attended Blackburn College during the Great Depression. She was a member of the American Socialist Party, which she joined at the age of 22. Feeling that social norms compelled her to find a husband, she married William Jerry Tate in 1939, and they had a son, Marshall, in 1940, and twins Jerry and James in 1942.

Velma Tate worked as a schoolteacher and a secretary until the 1950s while also selling poems, articles, and short stories to magazines that included Canadian Poetry Magazine, Good Housekeeping, True Love and True Story.

Beacon Books published Valerie Taylor's first novel, Hired Girl (also published as The Lusty Land), in 1953. Set on a poor Midwestern farm, Hired Girl has no lesbian subject matter, but it does explore other controversial sexual and political themes. Its publication earned Taylor $500, which she used to pay for a divorce.

Taylor, who described herself as both bisexual and a lesbian, has claimed that she only realized the full extent of her attraction to women when in her thirties. Though married at the time, she did not attribute the failure of her marriage to her sexuality; her husband William was alcoholic, abusive, and financially unstable. Taylor had relationships with both men and women after her divorce.

From 1957 to 1967, living in Chicago, Taylor wrote novels in the genre of lesbian pulp fiction, in which she became well-known. She explained her reasons for choosing the genre: "I began writing gay novels around 1957. There was suddenly a plethora of them on sale in drugstores and bookstores... many written by men who had never knowingly spoken to a lesbian. Wish fulfillment stuff, pure erotic daydreaming. I wanted to make some money, of course, but I also thought that we should have some stories about real people." Taylor worked as a proofreader for Henry Regnery Company in Chicago until 1961. She attempted to sustain her income with her writing after leaving Regnery.

Cornell University, which houses her literary estate, calls her novels "pulp fiction classics." She was prominent in activist causes from the 1950s through the 1980s, including LGBT rights, feminism, and the rights of the aged. She belonged to the Daughters of Bilitis, contributing her work to their magazine The Ladder, the first nationally distributed lesbian publication. Taylor was instrumental in starting Mattachine Midwest in 1965 and lent her services to its newsletter as editor for several years. She protested at the 1968 Democratic Convention with other members of Mattachine Midwest, and she worked with the Women's International League for Peace and Freedom.

In 1965 she met Pearl Hart, another founder of Mattachine Midwest. They were together until 1975 when Hart died. Not being an immediate family member, Taylor was not allowed to visit Hart in the hospital as she was dying and missed being able to tell her goodbye. She had to appeal to a friend of Hart's but by the time she was able to see her, Hart was in a coma.

Naiad Press published several of Taylor's books in the late 1970s and early 1980s.

She became a Quaker in 1979 after relocating to Tucson, Arizona, and a member of the Gray Panthers, a social justice activist group.

In 1992, she was inducted into the Chicago Gay and Lesbian Hall of Fame. Chicago Gay and Lesbian Hall of Fame She died on October 22, 1997 at the age of 84.