Phillips was born in London and educated at Bryanston School and Cambridge, where she read social anthropology. After university, she worked as a researcher in television documentaries and current affairs, interrupting this career for a year to complete an MA in visual anthropology at the University of Manchester. In 2003 she quit television completely to pursue a career as a writer. Phillips's first novel, The Talentless Miss Pigeon, was turned down by publishers. She worked in bookshops while writing her second novel, Gods Behaving Badly. On the advice of a representative from Random House, Phillips submitted the second work to Dan Franklin, the publishing director of Jonathan Cape, who purchased the UK and Commonwealth rights.

Phillips left bookselling in 2007 to concentrate on writing. She also has a regular personal blog on blogspot.com, which often includes reviews of literature, theatre, and film, as well as current television and radio.

Phillips conceived the idea for Gods Behaving Badly while listening to a philosophy teacher's comparison between the Christian God and those of the ancient world:

He was saying that the gods of the ancient world had flaws, they were more human, and I suddenly thought, what if they were right? There is something arbitrary about belief; if you are a Christian, then you have to believe that the Hindus are wrong, and the other way round. You can back your beliefs up with archaeology or sacred texts, but ultimately it comes down to siding with one team or another. And I thought — what about the Greeks? No one sides with that team any more, but what if they were the ones who got it right? So here's this group of gods, imagine if they were still around...

She drew further inspiration for the novel's plot from the legend of Orpheus and Eurydice.

Gods Behaving Badly is Phillips's first published novel. It was released in the UK to largely positive reviews, and has been sold to over 12 countries. including Canada, where it reached #1 in the top-selling fiction list. It has been optioned for television by Ben Stiller's Red Hour Productions.