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Catton was born in Canada where her New Zealand father was a graduate student completing his doctorate at the University of Western Ontario. She grew up in Christchurch after her family returned to New Zealand when she was six years old, although she spent a year living in Leeds where she attended Lawnswood School. She referred to this experience as "amazing, but a real eye opener" due to the toughness of the environment. She attended Burnside High School, studied English at the University of Canterbury, and completed a Master's degree in Creative Writing at The Institute of Modern Letters, Victoria University of Wellington.

In 2008, Catton was awarded a fellowship to the Iowa Writers' Workshop. She was described in 2009 as "this year's golden girl of fiction".

In 2011, she was the Ursula Bethell Writer in Residence at the University of Canterbury.

Catton's 2008 debut novel, The Rehearsal, was written as her Master's thesis and deals with reactions to an affair between a male teacher and a girl at his secondary school.

Catton's second novel, The Luminaries, was published in 2013. The novel is set on the goldfields of New Zealand in 1866. It was shortlisted for and subsequently won the 2013 Man Booker Prize making Catton, at the age of 28, the youngest author ever to win the Booker. She was previously, at the age of 27, the youngest author ever to be shortlisted for the Man Booker Prize.

At 832 pages, The Luminaries is the longest work to win the prize in its 45-year history. The chair of the judges, Robert Macfarlane commented "It's a dazzling work. It's a luminous work. It is vast without being sprawling." Catton was presented with the prize by the Duchess of Cornwall on 15 October 2013 at Guildhall.

In November 2013 Catton was awarded the Canadian Governor General's Literary Award for fiction for The Luminaries.

In December 2013 Catton was made a Member of the New Zealand Order of Merit.

In January 2014 it was announced that Catton would be awarded an honorary degree of Doctor of Literature in May at Victoria University of Wellington, where she has studied.