Johnston graduated from Memorial University of Newfoundland in 1978 with a degree in English literature. He then worked for three years as a newspaper reporter with the St. John's Daily News. In 1981, he moved to Ottawa, and pursued writing full-time. His novel The Divine Ryans won the 1991 Thomas Head Raddall Award.
Johnston's breakthrough novel, 1998's The Colony of Unrequited Dreams, was acclaimed for its historical portrayal of legendary Newfoundland politician Joey Smallwood. This novel was chosen for the 2003 edition of CBC Radio's Canada Reads competition, where it was championed by educator Justin Trudeau.
For the spring of 2002 Johnston was the Writer-in-Residence at Hollins University in Roanoke, Virginia.