The middle child of three whose parents suffered from an unhappy marriage, Brown was born in the Greenpoint neighborhood of Brooklyn, New York, and in 1923 attended boarding school in Woodstock, Connecticut, while her parents were living in Canterbury. She began attending Dana Hall School in Wellesley, Massachusetts, in 1926, where she did well in athletics. After graduation in 1928, Brown went on to Hollins College in Roanoke, Virginia.

Following her graduation with a B.A. in English from Hollins in 1932, Brown worked as a teacher, and also studied art. It was while working at the Bank Street Experimental School in New York City that she started writing books for children. Her first book was When the Wind Blew, published in 1937 by Harper & Brothers.

Brown then went on to develop her Here and Now stories, and later the Noisy Book series while employed as an editor at William R. Scott. Her popular book The Little Fur Family, illustrated by Garth Williams, was published in 1946. Also in 1946, Brown wrote The Little Island under the pseudonym Golden MacDonald (illustrated by Leonard Weisgard), which won the Caldecott Medal in 1947. In the early 1950s, she wrote several books for the Little Golden Books series including The Color Kittens, Mister Dog and Sailor Dog.

Brown (nicknamed "Brownie" by her friends), dated the Prince of Spain, Juan Carlos, and in the summer of 1940 began a long-term relationship with Michael Strange (a.k.a. Blanche Oelrichs), poet/playwright, actress, and the former wife of John Barrymore. The relationship, which began as a mentoring one, eventually became romantic, and included co-habitating at 10 Gracie Square, in Manhattan, beginning in 1943. Strange, who was twenty years Brown's senior, died in 1950.

In 1952 Brown met James Stillman Rockefeller Jr. at a party, and they became engaged. Later that year, while on a book tour in Nice, France, she unexpectedly died at 42 of an embolism, two weeks after emergency surgery for an ovarian cyst. (Kicking up her leg to show the doctor how well she was feeling ironically caused a blood clot that had formed in her leg to dislodge and travel to her heart.) By the time of Brown's death, she had authored well over one hundred books. Her ashes were scattered at her island home, "The Only House" in Vinalhaven, Maine.

Brown bequeathed the royalties to many of her books including Goodnight Moon and The Runaway Bunny to Albert Clarke, the son of a neighbor who was nine years old when she died. In 2000, reporter Joshua Prager detailed in the Wall Street Journal the troubled life of Mr. Clarke, who has squandered the millions of dollars the books have earned him and who believes that Wise Brown was his mother, a claim others dismiss.

Brown left behind over 70 unpublished manuscripts. Her sister, Roberta Brown Rauch, after unsuccessfully trying to sell them, kept them in a cedar trunk for decades. In 1991, Amy Gary of WaterMark Inc., rediscovered the paper-clipped bundles of the more than 500 typewritten pages and set about getting the stories published.

Many of Brown's books have been re-released with new illustrations decades after their original publication. Many more of her books are still in print with the original illustrations. Her books have been translated into several languages; biographies on Brown for children have been written by Leonard S. Marcus (Harper Paperbacks, 1999) and Jill C. Wheeler (Checkerboard Books, 2006). Have a Carrot, a Freudian analysis of her "classic series" of bunny books has been written by Claudia H. Pearson (Look Again Press, 2010).