Ursula Nordstom was born in Manhattan and grew up in New York City. She took business courses at the Scudder School in New York before being hired as a clerk in the textbook department of Harper & Brothers and later as an assistant in the Harper Books for Boys and Girls section.

Nordstrom is credited with presiding over a transformation in children's literature in which morality tales written for adult approval gave way to works that instead appealed to children's imaginations and emotions.

She edited some of the milestones of children's literature, including E. B. White's Stuart Little (1945) and Charlotte's Web (1952), Margaret Wise Brown's Goodnight Moon (1947), Crockett Johnson's Harold and the Purple Crayon (1955), Syd Hoff's Danny and the Dinosaur (1958), Maurice Sendak's Where the Wild Things Are (1963), and Shel Silverstein's Where the Sidewalk Ends (1974).

Other authors she edited included Laura Ingalls Wilder, Margaret Wise Brown, Ruth Krauss, Crockett Johnson, Charlotte Zolotow, John Steptoe, M.E. Kerr, Arnold Lobel, among others.

Nordstrom began at Harper & Row in 1936 and was promoted to editor in chief of the Department of Books for Boys and Girls in 1940. In 1960 she became Harper's first female vice president. She stepped down as publisher in 1973, but continued on as senior editor with her own imprint, Ursula Nordstrom Books, until 1979. She was succeeded by her protege, author Charlotte Zolotow, who began her career as Nordstrom's stenographer.

Ursula Nordstrom died in 1988, aged 78, from ovarian cancer. With her at the time of death was her longtime companion, Mary Griffith.