Born on Rodney Street in Liverpool, Monsarrat was educated at Winchester and Trinity College, Cambridge. He intended to practise law. The law failed to inspire him, however, and he turned instead to writing, moving to London and supporting himself as a freelance writer for newspapers while writing four novels and a play in the space of five years (1934–1939). He later commented in his autobiography that the 1931 Invergordon Naval Mutiny influenced his interest in politics and social and economic issues after college.

Though a pacifist, Monsarrat served in World War II, first as a member of an ambulance brigade and then as a member of the Royal Naval Volunteer Reserve . His lifelong love of sailing made him a capable naval officer, and he served with distinction in a series of small warships assigned to escort convoys and protect them from enemy attack. Monsarrat ended the war as commander of a frigate, and drew on his wartime experience in his postwar sea stories.

Resigning his wartime commission in 1946, Monsarrat entered the diplomatic service. He was posted at first to Johannesburg, South Africa and then, in 1953, to Ottawa, Canada. He turned to writing full time in 1959, settling first on Guernsey, in the Channel Islands, and later on the Mediterranean island of Gozo (Malta).

Monsarrat's first three novels, published in 1934–1937 and now out of print, were realistic treatments of modern social problems informed by his leftist politics. The Visitor, his only play, fell into the same category. His fourth novel and first major work, This Is The Schoolroom, took a different approach. The story of a young, idealistic, aspiring writer coming to grips with the "real world" for the first time, it is at least partly autobiographical.

The Cruel Sea (1951), Monsarrat's first postwar novel, is widely regarded as his finest work, and is the only one of his novels that is still widely read. Based on his own wartime service, it followed the young naval officer Keith Lockhart through a series of postings in corvettes and frigates. It was one of the first novels to depict life aboard the vital, but unglamorous, "small ships" of World War II—ships for which the sea was as much a threat as the Germans. Monsarrat's short-story collections H.M.S. Marlborough Will Enter Harbour (1949), and The Ship That Died of Shame (1959) mined the same literary vein, and gained popularity by association with The Cruel Sea.

The similar Three Corvettes (1945 and 1953) comprising H.M. Corvette (Flower class in the North Atlantic), East Coast Corvette (as First Lieutenant of HMS Guillemot) and Corvette Command (as Commanding Officer of HMS Winger) is actually an anthology of three true-experience stories published by him during the war years and shows appropriate care for what the Censor might say. Thus Guillemot is Dipper and Shearwater is Winger in the book. H M Frigate is similar but deals with his time in command of two frigates. His use of the name Dipper could allude to his formative years when summer holidays were spent with his family at Trearddur Bay. Members of the famous sailing club based there, he recounted much of this part of his life in a book 'My brother Denys'. Denys Monserrat was killed in Egypt during the middle part of the war whilst his brother was serving with the Royal Navy. Another tale recounts his bringing his ship into Trearddur Bay during the war for old times sake.

Monsarrat's more famous novels, notably The Tribe That Lost Its Head (1956) and its sequel Richer Than All His Tribe (1968), drew on his experience in the diplomatic service and make important reference to the colonial experience of Britain in Africa. Several have peripheral connections to the sea: The Nylon Pirates (1960) tells a story of piracy aboard a modern ocean liner, and A Fair Day's Work (1964) deals with labour unrest in a shipyard. The Kappillan of Malta (1973) is as much a story of a place, the island of Malta, as it is of a priest on that island during the terrible days of World War II. The Story of Esther Costello (1952), while perceived as an uncomplimentary take on the life of Helen Keller and her teachers and assistants, is really an exposé of sleazy practices and exploitation of real causes in the fundraising racket, similar to criticisms of televangelism. It caused a minor public outcry when it first appeared, and Keller's staff considered suing him, then tried to keep the book off the shelves. His final work, unfinished at the time of his death but published in its incomplete form, was a two-volume historical novel titled The Master Mariner. Based on the legend of the Wandering Jew, it told the story of an Elizabethan English seaman who, as punishment for a terrible act of cowardice, is doomed to sail the world's seas until the end of time. His hero participates in critical moments in history; Monsarrat used him to illustrate the central role of seamen.

Life is a four letter word: Breaking in (London, 1966) and Life is a four letter word: Breaking out (London, 1970) comprise Monsarrat's autobiography.

The Royal Navy co-operated with his wish to be buried at sea.

• The Visitor - play
• This Is The Schoolroom
• My brother Denys
• The Whipping Boy (1936)
• Three Corvettes (1945 and 1953)
• H M Frigate (1946)
• H.M.S. Marlborough Will Enter Harbour (1949)
• The Cruel Sea (1951)
• The Story of Esther Costello (1952)
• "Castle Garac" (1955)
• The Tribe That Lost Its Head (1956)
• The Ship That Died of Shame (1959)
• The Nylon Pirates (1960)
• The White Rajah (1961)
• The Time Before This (1962)
• Smith and Jones (1963)
• Something to Hide (1963)
• A Fair Day's Work (1964)
• The Pillow Fight (1965)
• Life is a four letter word: Breaking in (London, 1966) - autobiography
• Richer Than All His Tribe (1968)
• Life is a four letter word: Breaking out (London, 1970) - autobiography
• The Kappillan of Malta (1973)
• The Master Mariner - unfinished

Film adaptations

• The Cruel Sea (1953)
• The Ship That Died of Shame (1955)
• The Story of Esther Costello (1957)
• Something to Hide (1972)