Born to Louis and Anna Breithaupt, the youngest of the five children, Henry was a native of Milwaukee, Wisconsin. Unfortunately, Henry was stricken with rheumatic fever at the age of six, which kept her bedridden until the age of twelve. Because of her illness, Henry wasn't allowed to go to school with other children because of her weak state and the fear of spreading the illness to others. While she was confined indoors, she discovered the joy of reading. Henry's love of animals started during her childhood. Soon afterwards, she also discovered a love for writing when her parents presented her with a writing desk for Christmas. Henry later said, "At last I had a world of my very own -- a writing world, and soon it would be populated by all the creatures of my imagination."
Henry sold her first story at the age of 11. She often wrote about animals, such as dogs, cats, birds, foxes, and even mules, but chiefly her stories focused on horses.
She studied at Milwaukee State Teachers College.On May 5, 1923, she married Sidney Crocker Henry. During their sixty-four years of marriage they didn't have children, but instead had many pets that inspired some of Marguerite’s stories. They lived in Wayne, Illinois.
In 1945, Henry began a twenty-year collaboration with artist Wesley Dennis. She recalled " I had just finished writing Justin Morgan Had a Horse, and wanted the best horse artist in the world to illustrate it. So I went to the library, studied the horse books, and immediately fell in love with the work of Will James and Wesley Dennis. When I found out that Will James was dead, I sent my manuscript to Wesley Dennis." Henry and Dennis eventually published 15 books together.
In 1947, she published Misty of Chincoteague and it was an instant success. Later, this book...as well as Justin Morgan had a Horse and Brighty of the Grand Canyon...were made into movies.
She finished her last book, Brown Sunshine of Sawdust Valley, just before her death on November 26, 1997 at the age of 95.
Henry received the Newbery Honor for two of her books, Justin Morgan Had a Horse in 1945 and for Misty of Chincoteague, in 1948. She received the Newbery Medal in 1949 for King of the Wind. Brighty of the Grand Canyon was given the William Allen White Children's Book Award in 1956. In 1960, Black Gold won the Sequoyah Book Award. Gaudenzia: Pride of the Palio was awarded the Clara Ingram Judson Award for children's literature in 1961.