Siobhan Dowd was born in London, England, to Irish parents. She attended a Roman Catholic grammar school in south London and held a BA Hons degree in Classics from Lady Margaret Hall, Oxford University and an MA with distinction from Greenwich University in Gender and Ethnic Studies.

In 1984, she joined the writer's organisation International PEN, initially as a researcher for its Writers in Prison Committee and later as Program Director of PEN American Center's Freedom-to-Write Committee in New York City. Her work there included founding and leading the Rushdie Defense Committee USA and travelling to Indonesia and Guatemala to investigate local human rights conditions for writers. During her seven-year stay in New York, Dowd was named one of the "top 100 Irish-Americans" by Irish-America Magazine and AerLingus, for her global anti-censorship work.

On her return to the UK, Dowd co-founded, with Rachel Billington, English PEN's readers and writers program. The program takes authors into schools in socially deprived areas, as well as prisons, young offender's institutions and community projects. During 2004, Dowd served as Deputy Commissioner for Children's Rights in Oxfordshire, working with local government to ensure that statutory services affecting children's lives conform with UN protocols. .

Just before Dowd's death, the Siobhan Dowd Trust was set up, where all the proceeds from her literary work will be used to assist disadvantaged children with their reading skills.

Siobhan Dowd died of breast cancer on 21 August 2007, she was survived by her husband, Geoff Morgan, librarian at Oxford Brookes University and musician with the band Pianozouki.

Dowd edited two anthologies in the Threatened Literature Series for the Freedom to Write Committee of the PEN American Center: This Prison Where I Live (Cassell, 1996) and, jointly with Ian Hancock and Rajko Djuric, The Roads of the Roma: a PEN Anthology of Gypsy Writers (University of Hertfordshire Press, 1998 and 2004).

An invitation by Tony Bradman to contribute a story about an Irish “Pavee” (gypsy/traveller) to his collection of short stories for children about racism, Skin Deep (Puffin, 2004), led to a new career as an author of children's books. Dowd was inspired by this success to continue writing for children and developed close friendships with two established children's authors, Lee Weatherly (aka Titania Woods) and Fiona Dunbar. They would meet regularly to chat about their work and discuss children's literature.

A Swift Pure Cry, Dowd's first novel, was published by David Fickling Books, an imprint of Random House Children's Books, in March 2006. It was long-listed for the Guardian Children's Fiction Prize, and short-listed for the Booktrust Teenage Prize, the Waterstone's Children's Book Prize, the Sheffield Children's Book Award, the Deutscher Jugendliteraturpreis, the CBI Bisto Book of the Year Award. It was also on the Carnegie Medal Shortlist for 2007. In May 2007, Dowd was awarded the Children's Book Ireland Eilís Dillon Award (sponsored by Bisto), and in June 2007 she was awarded the Branford Boase Award.

The London Eye Mystery was Dowd's second novel. It was published by David Fickling Books in June 2007. In September 2007 it won the NASEN/TES Special Educational Needs Children's Book Award, was longlisted for the 2008 Carnegie Medal, and shortlisted for 2008 Red House Children's Book Award, 2008 Doncaster Book Award, 2008 Southwark Schools Book Award. In May 2008, Dowd was posthumously awarded the ?10,000 Bisto Book of the Year prize for The London Eye Mystery and in January 2009 it won the Salford Children's Book Award.

At the time of her death, Dowd had completed two further novels: Bog Child was published in February 2008. It was short-listed for the Guardian Children's Fiction Prize, and in 2009 won the Carnegie Medal. Solace of the Road was published in January 2009. It was shortlisted for both the Guardian's Children's Fiction Prize and Costa Book Award in 2009.

Siobhan Dowd was married twice. Her first marriage broke down in the early 1990s and she subsequently moved to New York where she worked for PEN American Center. Dowd spent 7 years in New York until 1997, when she returned to London, to spend more time with her family. In 2000 she met Geoff Morgan, a librarian at Oxford Brookes University and accordionist with the band Bon Bon Kaotikai. They met at a dinner party Morgan was throwing. Dowd often said that it was "love at first fry" as he was cooking a stir fry at the time. She was to spend much of her time with Morgan composing songs and enjoying long walks. They married in March 2001, a week after Dowd tragically lost a baby. The wedding took place in Wales, and the ceremony was performed by a female priest at Saint Tudors Church in Pontllanfraith. Dowd and Morgan became totally devoted to each other and continued to work on their music, composing a number of Christmas carols for their family and friends, even though they experienced a number of shocks with her health.

In September 2004, Dowd was diagnosed with advanced breast cancer, just as her career as an author of children's books was taking off. In spite of this, she continued to write prolifically, but could not work whilst she was receiving treatment. Dowd maintained an elegant poise during the many public appearances she made in connection with her work and spent much time thinking about how she could use her success as an author to improve the lives of disadvantaged children. In the last year of her life she developed a friendship with the children's author Meg Rosoff, another victim of breast cancer. Siobhan Dowd is buried in the graveyard at St Margaret's Church in Binsey, Oxford.