She was born in Otterbourne, Hampshire, England, into a religious family background, was devoted to the Church of England, and much influenced by John Keble, a near neighbour and one of the leaders of the Oxford Movement. Yonge is herself sometimes referred to as "the novelist of the Oxford Movement", as her novels frequently reflect the values and concerns of Anglo-Catholicism.
She began writing in 1848, and published during her long life about 100 works, chiefly novels. Her first commercial success, The Heir of Redclyffe (1854), provided the funding to enable the schooner Southern Cross to be put into service on behalf of George Selwyn. Similar charitable works were done with the profits from later novels. Yonge was also a founder and editor for forty years of The Monthly Packet, a magazine with a varied readership, but targeted at British Anglican girls.
Among the best known of her works are The Heir of Redclyffe, Heartsease, and The Daisy Chain. A Book of Golden Deeds is a collection of true stories of courage and self-sacrifice. She also wrote Cameos from English History, Life of John Coleridge Patteson: Missionary Bishop of the Melanesian Islands and Hannah More. Her History of Christian Names was described as "the first serious attempt at tackling the subject" and as the standard work on names, despite its etymological shortcomings, in the preface to the first edition of The Oxford Dictionary of English Christian Names, 1944.
Although Yonge's work is largely out of print today, during her lifetime she was admired and respected by such notable literary figures as Alfred Tennyson and Henry James, and strongly influenced the Pre-Raphaelite Brotherhood, especially William Morris and D. G. Rossetti. Graham Greene quotes extensively from The Little Duke (1897) in his 1943 novel The Ministry of Fear.
Her personal example and influence on her god-daughter, Alice Mary Coleridge, played a formative role in Coleridge's zeal for women's education and thus, indirectly, lead to the foundation of Abbots Bromley School for Girls.
After her death, her friend, assistant and collaborator, Christabel Coleridge, published the biographical Charlotte Mary Yonge: her Life and Letters (1903).