Kelly was born in Belfast but reared in Dublin. She studied at a convent school. She initially worked for 13 years as a newspaper journalist with the Sunday World, also spending time as an agony aunt and film critic. She later said she "didn’t like that world of doorstepping and scandals, I was stressed with trying to be hard".

In 1997, Kelly's debut Woman to Woman was first published, although she did not receive an advance. In March 1998, she received her first royalty cheque, spending it on a central heating system for her home. She did not become a full-time writer until she had written three books. She had quit journalism by 2001. Being an artist from Ireland she has benefited from tax breaks.

Almost 300,000 copies of her novel Just Between Us were sold. She dedicated her seventh novel, Best of Friends, to her labrador Tamsin who had previously died.Always and Forever topped the UK bestseller list for all types of books during October 2005, displacing Dan Brown and J. K. Rowling who had been on top most weeks. Her publishers got her a flight to England to allow her to celebrate with them.

Kelly's first seven books featured in the bestsellers list in The Sunday Times. Her first eight novels achieved international sales worth £8 million. Her book Lessons in Heartbreak was shortlisted for the Eason Irish Popular Fiction Book of the Year at the Irish Book Awards in April 2009. Once in a Lifetime topped the UK bestsellers for Kelly again, for multiple weeks.

She is influenced by the writings of Jilly Cooper, Maeve Binchy and Joanna Trollope.

Kelly is involved with many charities, one dealing with children living in the Third World. She is a UNICEF ambassador. Her role has seen her visit Africa.

Currently living on an acre in Enniskerry, County Wicklow with her husband John Sheehan, a former President of Sony, and twin sons Murray and Dylan. She keeps leather Norwegian encyclopedias on a shelf in her toilet. Her father died after enduring Alzheimer's disease. She lived in Kimmage when she was twenty-three years old.