Dorothea Frances Canfield, as she was named at birth, was born in Lawrence, Kansas on February 17, 1879. Her father was James Hulme Canfield, a college professor at the University of Kansas and the University of Nebraska, and president of The Ohio State University; her mother, Flavia Camp, was an artist and writer. However, Canfield is most closely associated with Vermont, where she spent her adult life, and which served as the setting for many of her books.

In 1899 Dorothy Canfield received a B.A. from The Ohio State University. She was also a member of Kappa Kappa Gamma. Canfield went on to study Romance languages at Columbia University, and in 1904 was one of the few women of her generation to receive a doctoral degree. She was the first woman to receive an honorary degree from Dartmouth College, and also received honorary degrees from the University of Nebraska, Middlebury, Swarthmore, Smith, Williams, Ohio State University, and the University of Vermont. She spoke five languages fluently, and in addition to writing novels, short stories, memoirs, and educational works, she also forayed into literary criticism and translation.In 1907 she married John Redwood Fisher, and together they had two children, a son and a daughter. Another concern of Dorothy Canfield was her war work. She went to France during World War I, and worked with blinded soldiers. She also established a convalescent home for refugee French children from the invaded areas. William Lyon Phelps comments, "All her novels are autobiographical, being written exclusively out of her own experience and observation."

Her son James became a surgeon and captain in the U.S. Army during World War II. He served with the Alamo Scouts for three months at the end of 1944, following which he was attached to a Ranger unit which carried out the raid to free POW imprisoned at Cabanatuan in the Philippines. The raid was a great success, with the Rangers suffering only two fatalities. Captain Fisher was one, mortally wounded by a mortar shell. As he lay dying the next day, his last words were "Did we get them all out?"

Fisher died at the age of 79, in Arlington, Vermont, in 1958.

The Dorothy Canfield Fisher Children's Book Award, named after her, is a unique award for new American children's books, as the winner is chosen by the vote of child readers.

A dormitory at Goddard College in Plainfield Vermont is named for Fisher.