Little trustworthy information is known about the relatively short life of Yu Xuanji. She was born or grew up in Chang'an, which was not only the capital of the Tang Empire, and an important terminus of the Silk Road, but also one of the most sophisticated cities of its time. Yu was married as a concubine, or lesser wife, to an official named Li Yi () at 16, and after separating three years later she became a courtesan and a Daoist nun. She was a fellow of Wen Tingyun, to whom she addressed a number of poems. She died early, at the age of 26 to 28. Apart from names and dates in her poems, the tabloid-style Little Tablet from the Three Rivers, (????), gives the only facts about her life, although these are salacious in detail: that she had an affair with Wen Tingyun, lived a scandalously promiscuous life, and was executed for beating her maid to death.

Yu Xuanji was a late Tang dynasty poet. In her lifetime, her poems were published as a collection called Fragments of a Northern Dreamland, which has been lost. The forty-nine surviving poems were collected in the Song Dynasty mainly for their freak value in an anthology that also included poems from ghosts and foreigners.

Published in 1998, her work was translated by the team of David Young and Jiann I. Lin. In the 2000s, her work was translated by Stephen Owen and Justin Hill.