Gaitskill was born in Lexington, Kentucky. She has lived in New York City, Toronto, San Francisco, and Marin County, CA, as well as attending the University of Michigan, where she earned her B.A. and won a Hopwood Award. Gaitskill has recounted (in her essay "Revelation") becoming a born-again Christian at age 21 but lapsing after six months. She married the writer Peter Trachtenberg in 2001 and lives in Rhinebeck, New York.

Gaitskill made her book debut in 1988 with the short-story collection Bad Behavior, having been trying to publish her work since the age of 23. Her fiction typically is about female characters dealing with their own inner conflicts, and her subject matter matter-of-factly includes many "taboo" subjects such as prostitution, addiction, and sado-masochism. Gaitskill says that she herself had worked as a stripper and call girl. She showed similar candor discussing her being raped in her essay "On Not Being a Victim" for Harper's.

The film Secretary (2002) is based on the short story of the same name in Bad Behavior, although the two have little in common. She characterized the film as "the Pretty Woman version, heavy on the charm (and a little too nice)," but observed that the "bottom line is that if [a film adaptation is] made you get some money and exposure, and people can make up their minds from there."

The novel Two Girls, Fat and Thin follows the childhood and adult lives of Justine Shade (thin) and Dorothy Never (fat). Justine works through her sadomasochistic issues while Dorothy works through her up-and-down commitment to the philosophy of "Definitism" and its founder "Anna Granite" (thinly-veiled satires of Objectivism and Ayn Rand). When journalist Justine interviews Dorothy for an exposé of Definitism, an unusual relationship begins between the two women. In an interview, Gaitskill discussed what she was trying to convey about Justine via her sadomasochistic impulses:

Gaitskill's honors include a Guggenheim Fellowship in 2002 and a PEN/Faulkner Award nomination for Because They Wanted To in 1998. Veronica (2005) was a National Book Award nominee, as well as a National Book Critics Circle finalist for that year. The book is centered on the narrator, a former fashion model and her friend Veronica who contracts AIDS. Gaitskill mentioned working on the novel in a 1994 interview, but that same year she put it aside until 2001. Writing of Veronica and Gaitskill's career in Harper's Magazine in March 2006, Wyatt Mason said:

Through four books over eighteen years, Mary Gaitskill has been formulating her fiction around the immutable question of how we manage to live in a seemingly inscrutable world. In the past, she has described, with clarity and vision, the places in life where we sometimes get painfully caught. Until Veronica, however, she had never ventured to show fully how life could also be made a place where, despite all, we find meaningful release.

Gaitskill's favorite writers have changed over time, as she noted in a 2005 interview, Barnes & Noble.com - Mary Gaitskill - Books: Meet the Writers but one constant is the author Vladimir Nabokov, whose Lolita "will be on my ten favorites list until the end of my life." Another consistently-named influence is Flannery O'Connor. Despite her well-known S/M themes, Gaitskill does not appear to consider the Marquis de Sade himself an influence, or at least not a literary one: "I don't think much of Sade as a writer, although I enjoyed beating off to him as a child."