Ihimaera was born near Gisborne, a town in the east of New Zealand's North Island and is of M?ori descent (Te Aitanga-a-Mahaki) and Anglo-Saxon descent through his father, Tom. He attended Church College of New Zealand in Temple View, Hamilton, New Zealand. He was the first M?ori writer to publish both a novel and a book of short stories. He began to work as a diplomat at the New Zealand Ministry of Foreign Affairs in 1973, and served at various diplomatic posts in Canberra, New York, and Washington, D.C. Ihimaera remained at the Ministry until 1989, although his time there was broken by several fellowships at the University of Otago in 1975 and Victoria University of Wellington in 1982 (where he graduated with a BA). In 1990, he took up a position at the University of Auckland, where he is Professor, Distinguished Creative Fellow in M?ori Literature.

Most of Ihimaera's work consists of short stories or novels. He has written a considerable number of stories, with the most notable being works such as Tangi, Pounamu, Pounamu, and The Whale Rider (the last of which became a film of the same name). His stories generally portray M?ori culture in modern New Zealand. His work often focuses on problems within contemporary M?ori society.

In 1995, Ihimaera published Nights in the Gardens of Spain, a semi-autobiographical work about a married father of two daughters coming out. He had come out to himself in 1984 and began the work, but out of sensitivity to his daughters, did not finish or publish it then.

He was made a Distinguished Companion in the New Zealand Order of Merit (equivalent to a knighthood in the old honours system) in 2004 for services to literature.

In 2004, his nephew Gary Christie Lewis married Lady Davina Windsor, becoming the first M?ori to marry into the British Royal Family.

In 2009 book reviewer Jolisa Gracewood detected evidence of plagiarism in Ihimaera's 2009 novel The Trowenna Sea. On 9 Nov 2009 Ihimaera admitted that he had plagiarised from the works of 16 other authors when writing the book. Emeritus Professor of History Keith Sorrenson has said Ihimaera had admitted plagiarizing material from his works in his earlier book, The Matriarch (1986), and said the Trowenna Sea incident showed he had "learnt nothing". The University of Auckland took no action, saying that Ihimaera removing the book from public sale for editing was sufficient. The publisher did not in fact order a recall of the book, however, and it remains widely available in stores. A revised edition, with fuller acknowledgement, originally planned for 2010 has since been canceled.