Chandra was born in New Delhi in 1961. His father, Navin Chandra, is a retired executive. His mother, Kamna Chandra, has written several Hindi films and plays; her most notable works include the films Prem Rog and A Love Story & yash chopra's "chandni". One of his sisters, Tanuja Chandra, is a filmmaker and screenwriter who has directed several films, including Sur and Sangharsh. His other sister, Anupama Chopra, is a film critic and consulting editor for India's NDTV.

Chandra received his high school education at Mayo College in Ajmer, Rajasthan, and attended St. Xavier’s College in Mumbai. As an undergraduate student, he transferred to the United States. He graduated from Pomona College in Claremont, California, with a magna cum laude B.A. in English (concentration in Creative Writing). Chandra then attended film school at Columbia University in New York, leaving halfway through to begin work on his first novel. He received his M.A. from The Writing Seminars at Johns Hopkins in 1987.

• Red Earth and Pouring Rain, Chandra's first novel, was inspired by the autobiography of James Skinner, a legendary nineteenth century Anglo-Indian soldier. The novel was written over several years at the writing programs at Johns Hopkins University and the University of Houston. It was published in 1995 by Penguin Books in India; by Faber and Faber in the UK; and by Little, Brown in the United States. Red Earth and Pouring Rain received outstanding critical acclaim, and it won both the Commonwealth Writers Prize for Best First Book and the David Higham Prize for Fiction. The novel is named after a poem from the Kuruntokai, an anthology of Classical Tamil love poems.

• Love and Longing in Bombay, a collection of short stories, was published in 1997 by the same publishers as Red Earth and Pouring Rain. This collection of stories won the Commonwealth Writers Prize for Best Book (Eurasia region), was short-listed for the Guardian Fiction Prize, and was well received by international press and media.

• In 2000, Vikram served as co-writer, with Suketu Mehta, for Mission Kashmir, a Bollywood movie directed by his brother-in-law, the award-winning director Vidhu Vinod Chopra, and starring Hrithik Roshan.

• Sacred Games, Vikram Chandra's most recent novel, was published in 2006. Set in a sprawling Mumbai, it features Sartaj Singh, a policeman who first appeared in Love and Longing in Bombay. Over 900 pages long, Sacred Games was one of the year's most anticipated new novels and was the subject of a bidding war amongst the leading publishers in India, the UK, and the US.