Vega Yunqué was born in Ponce and lived in Cidra, Puerto Rico until his family moved to the South Bronx in 1949. Even as a child, he loved to read, and became familiar with many of the great European works. His seminal influences included Cervantes, Azorín, Borges, Unamuno, Lope de Vega, Victor Hugo, and members of the Generation of '27 literary movement.

Upon graduating from high school in 1954, he joined the United States Air Force.

During his leave time Vega Yunqué focused on reading and analysis of American literature, after finding a large collection of books at his sister's house.

After his Air Force service Vega Yunqué attended Santa Monica College, and eventually got his degree from New York University. He dropped out of school temporarily after the assassination of U.S. President John F. Kennedy, and worked in East Harlem as part of the war on poverty.

Vega Yunqué was married to Pat Vega née Patricia Jean Schumacher on December 31, 1961; their marriage ended in divorce in 1997. They had three children: Alyson, Matthew, and the artist Tim Vega. Vega Yunqué was also the stepfather of Suzanne Vega.

Vega Yunqué focused on writing since 1972 and published his first short story "Wild Horses" in Nuestra Magazine in 1977. He wrote 14 novels and 3 story collections. He said that he often worked on several books at once and had no problem keeping track of them:

Since my work is about people and my affection for them, I don’t lose track of who they are just like I don’t lose track of my children or other relatives and acquaintances. I have friends — and characters — whom I don’t see for a long time, but as soon as we get together we pick up where we left off.

Vega Yunqué's literary influences were subtle and complex. In addition to William Faulkner, John Steinbeck and Ernest Hemingway, he was heavily influenced by Holocaust literature and by the concern of the Irish members of his childhood neighborhood, for the independence and reunion of their native country.

Yunqué's published fiction includes the novels The Comeback, Blood Fugues, The Lamentable Journey of Omaha Bigelow into the Impenetrable Loisaida Jungle, and No Matter How Much You Promise to Pay the Rent You Blew It Cauze Bill Bailey Ain't Never Coming Home Again. His short story collections include Mendoza's Dreams and Casualty Report, which were adapted for the stage and anthologized internationally.

The critical response to No Matter How Much You Promise to Pay the Rent You Blew It Cauze Bill Bailey Ain't Never Coming Home Again was overwhelming.

The New York Times Book Review called it "a powerhouse of a novel...it brings vividly to life, with its polyphony of voices, the simmering ethnic stew of the great American city." The Washington Post found it "a sprawling, iconoclastic, ambitious, stunningly written novel that is part picaresque, part bildungsroman, and part recapitulation of America's last half century." The Village Voice declared that Vega Yunqué had "appropriated English, making it imitate Spanish, jazz and street noise. He creates a fantasy community out of the materials of exile." Newsday found it "juicy, sprawling... Yunqué succeeds brilliantly." The New York Post called it "a profound novel in the tradition of Ralph Ellison and William Faulkner." The novel also won the PEN Oakland/Josephine Miles Literary Award and the Washington Post Book of the Year Award.

Vega Yunqué's reputation grew with The Lamentable Journey of Omaha Bigelow into the Impenetrable Loisaida Jungle.

According to Booklist, Vega Yunqué's "ribald and rambling style reverberates throughout his third novel...he deftly skewers the politics of academia, the tyranny of mediocrity in contemporary American literature, and America's ongoing prejudice against Puerto Ricans. Vega Yunqué, unlike many formulaic novels he disparages, definitely has a lot to say."

Publishers Weekly announced that "Vega Yunqué has a keen intelligence, an ear for dialogue and a flair for zany passages of magic realism."

His subsequent novel Blood Fugues solidified Vega Yunqué's international reputation as a literary novelist.

Publishers Weekly wrote that "Yunqué writes with grace, vividly evoking New York City and American life." Booklist announced "the author is a bravura storyteller with an extraordinary ability to create fascinating, emotion-engaging characters...the novel's subplots involving political terrorism and immigrant resistance to imposed assimilation are absolutely relevant to today's America."

Vega Yunqué's short story collections also met with critical acclaim.

The San Francisco Chronicle announced that in Mendoza's Dreams Vega Yunqué "show us, in twelve funny and personality-laden tales, that there is indeed much more to life in Spanish Hartlem than gang warfare; set to the strains of Bernstein and Sondheim." The Village Voice Literary Supplement found Casualty Report to be "brilliantly traced...a multivocal journey through layers of miscegenated consciousness, intensely bound to a nation that often works like a dream."

Vega Yunqué was the campaign manager for the first political campaign of State Assemblyman Nelson Antonio Denis, and served as the first Executive Director of the El Barrio Local Development Corporation (EBLDC).

He taught creative writing at the Latin American Writers Institute, the Teachers & Writers Collaborative, the New School for Social Research, as well as at Hostos Community College, Hunter College, and SUNY Old Westbury.

He also served as Director of the Clemente Soto Vélez Cultural and Educational Center , and as a counselor to ASPIRA and the Addiction Service Agency.

Vega Yunqué died on August 26, 2008 from a possible thrombosis at Lutheran Medical Center in Brooklyn, New York City.

At the time of his death, Yunqué had completed the novel How That Dirty Rotten Charlie Maisonet Turned Me into a Puerto Rican Sex Freak and was finishing the story collection A Place of Remembrance on an Island Called Regret and the nonfiction book Spic, Writing Under the Threat of Censorship in the United States: A Jeremiad.

Amongst the many memorials and remembrances in his name, the New York Times obituary hailed Vega Yunqué's honesty and his "picaresque, combustive and sometimes flamboyantly comic expressions of the Puerto Rican experience in New York’s multicultural maelstrom." Another remembrance in the New York Times stated that "his novels captured the crazy glory of this city and its people, with jazzy riffs and elegant solos that flowed with rhythm. His words could dazzle, amuse and even infuriate."