Sidhwa was born to Zoroastrian parents Peshotan and Tehmina Bhandara in Karachi, British India and later moved with her family to Lahore. She was two when she contracted polio (which has affected her throughout her life) and nine at the time of the Partition of India (1947)(facts which would shape the character of "Lenny" as well as the background for her novel Cracking India, originally titled, Ice Candy Man). Literary Encyclopedia: Bapsi Sidhwa She received her B.A. from Kinnaird College for Women in Lahore in 1957.

She married at the age of 19 and moved to Mumbai, India for five years before she divorced and remarried in Lahore, Pakistan with her present husband Noshir who is also Zoroastrian. She had three children in Pakistan before beginning her career as an author. She currently resides in Houston, USA. She describes herself as "Punjabi-Parsi-Indian-Pakistani"

She has previously taught at the University of Houston, Rice University, Columbia University, Mount Holyoke College, and Brandeis University.