Benson, the daughter of Alonzo Redway and Anna Prophater Smith, moved with her family from St. Louis to New York, where she attended the Horace Mann School, studied dance and then started working when she was 17 years old. At age 19, she married Reynolds Benson. The couple had a daughter and later divorced.

She began her career writing weekly interview articles and film reviews for the New York Morning Telegraph. Between 1929 and 1941, she published 99 stories in The New Yorker, including nine signed with her pseudonym Esther Evarts.

Her stories "The Overcoat" and "Suite 2049" were selected as O. Henry prize stories for 1935 and 1936. Her collection, People are Fascinating (Covici Friede,1936) includes almost all the stories Benson had then published in The New Yorker, plus four from American Mercury. She followed with another collection, Emily (Covici Friede, 1938). Stories of the Gods and Heroes (Dial Press, 1940) was juvenile fiction adapted from Thomas Bulfinch's Age of Fable. Women and

"New Play in Manhattan", Time, December 1, 1941. Directed by Moss Hart, Junior Miss ran on Broadway from 1941 to 1943. In 1945, the play was adapted to the film Junior Miss with George Seaton directing Peggy Ann Garner in the lead role. The Junior Miss radio series, starring Barbara Whiting, was broadcast weekly on CBS in 1949.

MGM's Meet Me in St. Louis (1944) was one of the most popular movies made during World War II. The stories in Sally Benson's book, Meet Me in St. Louis, were first written as short vignettes in a series, 5135 Kensington, which The New Yorker published from June 14, 1941 to May 23, 1942. Benson took her original eight vignettes and added four more stories for a book compilation with each chapter representing a month of a year (from 1903 to 1904). When the book was published by Random House as Meet Me in St. Louis in 1942, it was titled after the MGM film, then in the very early stages of scripting. At MGM, Benson wrote an early draft of the screenplay, but it was not used.

Her other screen work includes Shadow of a Doubt (1943) for Alfred Hitchcock, Come to the Stable (1949), Summer Magic (1963) and Viva Las Vegas (1964). Her screenplay for Anna and the King of Siam (1946) was nominated for an Academy Award.

Her work for television includes episodes of Bus Stop (1961).

She died in Woodland Hills, Los Angeles, California, aged 74.