Born in Neepawa, Manitoba, Laurence was the daughter of solicitor Robert Wemyss and Verna Jean Simpson. Following the death of her mother when Laurence was four, Margaret Simpson, a maternal aunt, came to take care of the family. A year later, Simpson married her father and in 1933 they had a son, Robert. In 1935, Robert Wemyss Sr. died of pneumonia.
In 1952, Laurence gave birth to daughter Jocelyn during a leave in England. Son David was born in 1955 in the Gold Coast. The family left the Gold Coast just before it gained independence as Ghana in 1957, moving to Vancouver, British Columbia, where they stayed for five years.
In 1962, she separated from her husband and moved to London, England for a year. She then moved to Elm Cottage (Penn, Buckinghamshire) where she lived for more than ten years, although she visited Canada often. Her divorce became final in 1969. That year, she became writer in residence at the University of Toronto. A few years later, she moved to Lakefield, Ontario. She also bought a cabin on the Otonabee River near Peterborough, where she wrote The Diviners (1974) during the summers of 1971 to 1973. Laurence served as Chancellor of Trent University in Peterborough from 1981 to 1983.
In 1986, Laurence was diagnosed with lung cancer late in the disease's development. According to the James King biography,The Life of Margaret Laurence, the prognosis was grave, and as the cancer had spread to other organs, there was no treatment offered beyond palliative care. Laurence decided the best course of action was to spare herself and her family further suffering. She committed suicide at her home in Lakefield on January 5, 1987. She was buried in her hometown in the Neepawa Cemetery, Neepawa, Manitoba. Laurence's house in Neepawa has been turned into a museum. Her literary papers are housed in the Clara Thomas Archives at York University.
It was after her return to Canada that she wrote The Stone Angel, the book for which she is best known. Set in a fictional prairie small town, the novel is narrated retrospectively by Hagar Shipley, a ninety-four year old woman living in her eldest son’s home in Vancouver. Published in 1964, the novel is of the literary form that looks at the entire life of a person, and Laurence produced a novel from a Canadian experience. After finishing school, the narrator moves from Toronto to Manitoba, and marries a rough-mannered homesteader, Bram Shipley, against the wishes of her father, who then disinherits her — disinheritance a recurring theme in much of Laurence's fiction. The couple struggles through the economic hardship and climatic challenges of Canadian frontier existence, and Hagar, unhappy in the relationship, leaves Bram, moving with her son John to Vancouver where she works as a domestic for many years, betraying her social class and upbringing. The novel is often assigned reading in Canadian secondary and post-secondary schools.
Laurence was published by Canadian publishing company McClelland and Stewart, and she became one of the key figures in the emerging Canadian literature tradition. Her published works after The Stone Angel express the changing role of women's lives in the 1970s. Although on the surface, her later works like the The Diviners depict very different roles for women than her earlier novels do, it is safe to say that Laurence throughout her career was faithfully dedicated to presenting a female perspective on contemporary life, depicting the choices — and consequences of those choices — women must make to find meaning and purpose in life.