Reader was born in Glasgow, the daughter of a welder, and the eldest of seven children (her brother, Francis, is vocalist with the band Trashcan Sinatras). Living at first in a two-bedroomed flat, the family was re-housed in Irvine, Ayrshire; however, Reader returned to Glasgow (where she lived with her grandmother) in order to finish her schooling. She began playing the guitar at the age of ten, and started her musical career busking, first in Glasgow's Sauchiehall Street, then in the early 1980s around Europe (where she also worked with circus and performance artists).
Back in Scotland, she joined the punk band Gang of Four as a backing singer which led to her first U.S. tour. Back in the UK, after leaving the band she started working as a session vocalist in London, singing with such acts as Eurythmics and Alison Moyet.
This success was short-lived, however. In November, 1989, after a break, during which Reader had her first child, Charlie, with her French-Algerian partner Milou, Mark Nevin abandoned a recording session for the second album, which eventually led to the splitting of the band. A makeshift second album, a collection of B-sides and live tracks, Ay Fond Kiss, was rushed out the following year.
Returning to London, Reader worked on new material with a backing band calling itself The Patron Saints of Imperfection (made up of Roy Dodds, Neill and Calum MacColl, and Phil Steriopoulos). This became her first solo album, recorded for RCA Records: 1992's Mirmama. It was followed by Eddi Reader (1994), which won her the "Best female singer" BRIT Award that year, Candyfloss and Medicine (1996), Angels & Electricity (1998), Simple Soul (2001) and Driftwood (2002) - a "homegrown" release of songs recorded during the Simple Soul sessions. During this time, Reader also recorded the song "Ocean Love" for the soundtrack of the animated film Help! I'm a Fish (2001). Reader also contributed vocals to one of Big Country's final singles before Stuart Adamson's death, "Fragile Thing."
Reader continued to tour (England, Scotland, Japan, Australia, Spain, the United States, and Ireland). In 2003, she recorded her album of material by Robert Burns, with the Royal Scottish National Orchestra, leading to good reviews and an international resurgence in interest in Scotland's "bard".
She spent April 2006 touring Australia with Boo Hewerdine and Alan Kelly, following the release of St Clare's Night Out: Live at The Basement, with Australian acts such as David Hosking invited to open the concerts.
Her eighth studio album Peacetime was released in the UK on 29 January 2007 on the Rough Trade record label. Produced by fellow Scottish folk musician, John McCusker, the album features a few Burns composed songs, alongside brand new material with longtime collaborator Boo Hewerdine and Trashcan Sinatras' John Douglas. Reader promoted the album with a fifteen date UK tour.
In spring 2008, Reader was a special guest at the Hotel Cafe Tour hosted by Tom McRae. In late summer, she revealed on her official MySpace blog that she will be performing in upcoming period-drama Me and Orson Welles, directed by Richard Linklater and starring Zac Efron, Christian McKay and Claire Danes. Reader will perform re-arranged, 1930s standards, with Jools Holland. Reader has previously collaborated with Holland on the single "Waiting Game." The film is expected to be released in 2009.
Her ninth studio album Love is the Way will be released on 3 March 2009. In a special arrangement with record label Rough Trade she will be selling an exclusive, pre-released and minimally-packaged version of the disc on her autumn UK tour in October and November. The album, which will only be available at venues until the official release, will be sold in a wallet with the official release expected to have more detailed artwork and packaging.
The Robert Burns project saw Reader awarded an MBE for outstanding contributions to the arts in the New Year's honours list of 2006.
In May 2007 she was awarded an honorary doctorate from the University of Strathclyde.
Later that year she was recognised for her contributions to music and to the education and encouragement of young musicians with an honorary doctorate and a Doctor of Letters from Glasgow Caledonian University.
In June 2008 she received another doctorate for her musical work, this time from the University of Stirling.