Born in Aurora, Ontario, she attained her medical degree from the University of Toronto in 1946. Dr. Stephenson practised medicine for more than 40 years. She was a founding member of the College of General Practice in Canada, now known as the College of Family Physicians Canada. She was also the first female member of the board of directors of the Ontario Medical Association and the Canadian Medical Association, and served as the first female president of both organizations.
Dr. Stephenson was first elected to the Legislative Assembly of Ontario in the 1975 provincial election, representing the constituency of York Mills in North York. She was appointed to Bill Davis's cabinet as Minister of Labour on October 7, 1975, and won a convincing re-election victory over Liberal candidate Wilfred Caplan in the 1977 election.
On August 18, 1978, she was named Minister of Education and Minister of Colleges and Universities. Stephenson was not informed of Davis's decision to extend full-funding to Catholic high schools until the policy had already been decided, and was privately opposed. She was returned to the legislature was the largest majority of her career in the 1981 provincial election.
Stephenson was on the right-wing of the Ontario Progressive Conservative Party, and was a prominent supporter of Frank Miller's bid to become party leader in 1985. When Miller replaced Davis as Premier of Ontario on February 8, 1985, he named Stephenson as the Chair of the Management Board of Cabinet.
Under Miller's leadership, the Progressive Conservatives were reduced to a tenuous minority government in the 1985 provincial election. Stephenson, who was personally re-elected without difficulty, was named as Ontario's first female Treasurer and Deputy Premier on May 17. She accomplished little in these roles before the Miller government was defeated by a motion of non-confidence in June 1985. She is the only Finance Minister/Treasurer who has not presented a budget in the Legislative Assembly of Ontario. In opposition, she served as her party's Critic for Health. She retired from politics at the 1987 provincial election.
In the 1990s, Dr. Stephenson was appointed as a Board Member on the province's new Education Quality and Accountability Office, which monitors and reports to the public on the performance of the education system. In May 1997, she was appointed Chairman of the Learning Opportunities Task Force. She is a founding member of the Canadian Institute for Advanced Researched, and in recent years has been an advocate of privately owned and financed universities. Stephenson herself has attempted to start a private business university in Queensville, Ontario.