Elizabeth Yates was born in Buffalo, New York, the daughter of Henry and Mary Duffy Yates. She was the sixth of seven children. Her father owned a farm, and Yates recalled that "there were horses, cows, chickens and pigs, dogs always. When we were very small each one of us had some plot of ground that was ours to plant and crop."Her love of animals and the land stems from these childhood experiences.

She attended Franklin School, graduating in 1924. Yates then spent a year at Oaksmere, a private school near New York City, founded by mathematician Winifred Edgerton Merrill. Yates looked back on her school days with fondness. Margaret Trudell's biography of Yates relates her reminiscences: "I know how much I look back on my teachers now, with a heart almost aching with gratitude for all they gave me, and not a little remorse for all the trouble I gave them...the teachers I think of with most gratitude are the teachers who made books real to me."

Books were an important part of her life. Yates credited her mother for instilling in her a love for books by reading aloud to the family. At the age of 12, at the request of her father, Yates read through the whole Bible. This was to become one of her favourite books. Her sister also encouraged her to read, and made a list of recommended books for Elizabeth.

From an early age, Yates enjoyed writing. In her childhood, she transformed an unused pigeon loft on the family farm into a secret writing place. After her schooling was finished, she moved to Manhattan and began writing book reviews and other newspaper articles. In 1929, she married William McGreal and the couple moved to England, where they lived for the next 10 years. In 1938, her first book, High Holiday, was published by London publishing company A & C Black.

The couple returned to the United States in 1939, and settled in Peterborough, New Hampshire. They bought a farm, and a discovery of old artwork during the restoration of the farmhouse prompted Yates to write Patterns on the Wall. Personal experience formed the basis of many of Yate's novels. Her passion for the land led her to write The Road Through Sandwich Notch, a book which was influential in preserving that portion of New Hampshire for inclusion in the White Mountain National Forest.

Yates conducted writer's workshops at the University of New Hampshire, the University of Connecticut, and Indiana University.

Yates was widowed in 1963.

In 1943, Patterns on the Wall received the Herald Tribune Award. Yates' novel, Amos Fortune, Free Man, received the Newbery Medal, the inaugural William Allen White Children's Book Award, and the Herald Tribune Award. Mountain Born received a Newbery Honor in 1944, while in 1955 Rainbow Round the World received the Jane Addams Children's Book Award from the Women's International League for Peace and Freedom.

In 1970, she was given the Sarah Josepha Hale Award "in recognition of a distinguished body of work in the field of literature and letters".

In the 1990's, the New Hampshire Association for the Blind began the William and Elizabeth Yates McGreal Society. Yates had been a previous President of the Board, while her husband was the Association's first Executive Director.

In 1994, the Concord, New Hampshire Public Library created the Elizabeth Yates Award in her honour. This award is given annually to an individual who is "actively engaged in inspiring young people to read".

Elizabeth Yates' books have been described as "the result of extensive research, a strong underlying belief in God, and a vivid imagination."