Sillitoe was born in Nottingham, to working class parents. Like Arthur Seaton, the anti-hero of his first novel Saturday Night and Sunday Morning, his father worked at the Raleigh factory.

He left school at the age of 14 and worked at the Raleigh factory for the next four years, spending his free time reading. He then joined the Royal Air Force, serving as a wireless operator in Malaya. After returning to England, he was discovered to have tuberculosis and spent 16 months in an RAF hospital.

Pensioned off at 21 on 45 shillings a week, he lived in France and Spain for seven years in an attempt to recover. In 1955, while living in Mallorca with his partner, American poet Ruth Fainlight, and in contact with the poet Robert Graves, Sillitoe started work on Saturday Night and Sunday Morning, which was published in 1958. Influenced in part by the stripped-down prose of Hemingway, the book conveys the attitudes and situation of a young factory worker faced with the inevitable end of his youthful philandering. As with John Osborne's Look Back in Anger and John Braine's Room at the Top, the novel's real subject was the disillusionment of postwar Britain, and the lack of opportunities for the working class. It was adapted as a film by Karel Reisz in 1960, with Albert Finney as Arthur Seaton.

Sillitoe's story The Loneliness of the Long Distance Runner, which concerns the rebellion of a borstal boy with a talent for running, won the Hawthornden Prize in 1959. It was also adapted to film, in 1962, this time directed by Tony Richardson and starring Tom Courtenay.

He married Ruth Fainlight, with whom he had a child, David; Susan was later adopted. He lived in Kent and London.

In 1990, Sillitoe was awarded an honorary degree from Nottingham Trent University. The city's older Russell Group university the University of Nottingham also awarded him an honorary DLitt in 1994; in 2006, his best-known play was staged at the university's Lakeside Arts theatre in an in-house production.

Sillitoe wrote many novels, and several volumes of poetry. His 1995 autobiography, Life Without Armour was critically acclaimed on publication, and offers a view into his squalid childhood.

In 2007 Gadfly in Russia, an account of his travels in Russia spanning 40 years, was published. In 2008 London Books republished A Start in Life as part of its London Classics series and to mark the author's 80th birthday. Sillitoe appeared on BBC Radio 4's Desert Island Discs on 25 January 2009.

His long held desire for Saturday Night Sunday Morning to be remade for a contemporary audience was never achieved despite strong efforts. The film was blocked by the late Natasha Richardson, who owned the rights to the book from when her father adapted it in the 1960s. Danny Brocklehurst was set to adapt the book and Sillitoe gave his blessing to the project. The Richardson estate and Woodfall films refused this request.

He was elected a Fellow of the Royal Society of Literature in 1997.

On 25 April 2010 Sillitoe died at Charing Cross Hospital in London after a long battle with cancer.