Winterson was born in Manchester and raised in Accrington, Lancashire, by adoptive parents Constance and John William Winterson. She was raised in the Elim Pentecostal Church and, intending to become a Pentecostal Christian missionary, she began evangelising and writing sermons at age six.

However by age 16 Winterson declared she was lesbian and left home. She soon after attended Accrington and Rossendale College and supported herself at a variety of odd jobs while reading for a degree in English at St Catherine's College, Oxford.

After moving to London, her first novel, Oranges Are Not the Only Fruit, was published when she was 26 years old. It won the 1985 Whitbread Prize for a First Novel, and was adapted for television by Winterson in 1990, which in turn won the BAFTA Award for Best Drama. She won the 1987 John Llewellyn Rhys Prize for The Passion, a novel set in Napoleonic Europe.

Winterson's subsequent novels explore the boundaries of physicality and the imagination, gender polarities, and sexual identities, and have won several literary awards. Her stage adaptation of The PowerBook in 2002 opened at the Royal National Theatre, London. She also bought a derelict terraced house in Spitalfields, east London, which she refurbished into a flat as a pied-a-terre and a ground-floor shop, Verde's, to sell organic food.

Winterson was made an officer of Order of the British Empire (OBE) at the 2006 New Year Honours.

In 2009, she donated the short story Dog Days to Oxfam's Ox-Tales project comprising four collections of UK stories written by 38 authors. Winterson's story was published in the Fire collection.

In 2002, Winterson ended her 12-year relationship with BBC radio broadcaster and academic, Peggy Reynolds. Her novel Written on the Body was inspired by her affair with Pat Kavanagh, her literary agent.