Sylvia Nora Townsend Warner was born on December 6, 1893, in Devon, England, the only child of George Townsend Warner, a schoolmaster, and Nora Huddleston Warren. Educated at home, she moved to London in 1917 to pursue a career in musicology, serving as one of the editors of the ten-volume study Tudor Church Music. At the same time, she maintained an interest in writing poetry and fiction; her first novel, Lolly Willowes, was published in 1926. It was followed by Mr. Fortune's Maggot in 1927.

It was also in 1927 that Warner met Valentine Ackland (1906-1969), an aspiring writer. In 1930, they became life partners, eventually settling permanently in the village of Frome Vauchurch in 1937. Throughout the 1930s, they continued to work on their writing: Warner's short stories began to appear in The New Yorker (which would eventually publish more than 140 of them), while Ackland contributed to such periodicals as The Daily Worker and New Masses, both women having joined the Communist Party of Great Britain in 1935.

After attending the American Writers' Conference in New York in 1939, Warner and Ackland returned home in October, following Britain's declaration of war on Germany. Warner joined the Women's Volunteer Service, establishing rest centers for evacuees from the cities. Her published writing between 1939 and 1945 included an anthology of short stories, The Cat's Cradle Book (1940) and A Garland of Straw (1943).

The years immediately following the war were difficult ones for Warner, marked by her mother's increasing senility and eventual death in 1950, and by Valentine's ongoing affair with an American woman. Ackland eventually returned to Warner in 1949, and the next fifteen years were relatively tranquil for them both. During that time, Warner produced more than half a dozen books, including a translation of Proust's Contre Saint Beauve, (Scott Moncrieff's executors would not allow any other translations while his were in copyright), and a biography of the novelist T. H. White.

In 1967, Ackland learned that she had breast cancer; after a long struggle with the disease, she died in 1969. Warner, then in her mid-70s, continued to mourn her for the remainder of her life, though she found some solace in her garden and her much-loved cats. In her last years, she also enjoyed a resurgence of interest in her work, especially among feminist scholars.

Increasingly troubled by arthritis and deafness, Warner became bedridden early in 1978. She died on May 1 of that year.