Ramé was born in Bury St. Edmunds, England, to a French father and an English mother. She derived her pen name from her own childish pronunciation of her given name "Louise".Her opinion of her birthplace fluctuated; in one of her books she states

During her career, she wrote more than 40 novels, children's books and collections of short stories and essays. She was an animal lover and rescuer, and at times owned as many as thirty dogs. For many years she lived in London, but about 1874 she moved to Italy, where she remained until her death in 1908.

Ouida's work had several successive phases during her career. During her early period, her novels were a hybrid of the sensationalism of the 1860s and the proto-adventure novels that were being published in part as a romanticization of imperial expansion. Later her work was more typically historical romance, though she never stopped comment on contemporary society. She also wrote several stories for children.

One of her most famous novels, Under Two Flags, described the British in Algeria and expressed sympathy for the French...with whom Ouida deeply identified...and, to some extent, the Arabs. This book was adapted in plays (it was also adapted and produced four times as a film). As another sign of influence, the American author Jack London cited her novel Signa, which he read at age eight, as one of the eight reasons for his literary success.

Of short stature and with a "voice like a carving knife," during her early years Ouida wore diaphanous gowns, kept flowers near her, and commanded salons at the Langham Hotel that included soldiers, politicians, literary lights, and artists. Convinced of her ability to influence foreign policy through a combination of womanly wiles and strategic brilliance, she made suggestions to some of her famous visitors that they seemed...at least to her face...to take seriously. The heroine of another well-known novel, Idalia (which she claimed to have written at 16), was a rebel/ingenue sympathetic to Italian independence. Later, while living in France and Italy, Ouida continued to host locals and expatriates alike at her gatherings.

Ouida considered herself a serious artist. She was inspired by Byron in particular, and was interested in other artists of all kinds. Sympathetic descriptions of tragic painters and singers occurred in her later novels. Her work often combines romanticism with social criticism, however. In one novel, Puck, a talking dog narrates his views on society. Views and Opinions includes essays on a variety of social topics written in her own voice.

Although successful, she did not manage her money well and died poor on January 25, 1908, in Viareggio, Italy. She is buried in the English Cemetery in Bagni di Lucca, Italy. Soon after her death, a public subscription purchased and built a fountain for horses and dogs in Bury St Edmunds, with an inscription composed by Lord Curzon:

 The composer [[Mascagni]] bought the rights for her story, "Two Little Wooden Shoes", intending to adapt it for an opera.  His friend [[Puccini]] became interested in the story and began a court action, claiming that because Ouida was in debt, the rights to her works should be put up for public auction to raise funds for creditors. He won the court challenge and persuaded his publisher Ricordi to bid for the story.  After Ricordi won, Puccini lost interest and never composed the opera.  Mascagni later composed one based on the story, under the title ''Lodoletta''.