Ondaatje was born in Colombo, Sri Lanka, then called Ceylon, in 1943; he is of Dutch and Sinhalese ancestry, making him a Burgher. His parents separated when he was an infant; he then lived with relatives until 1954 when he joined his mother in England. Before moving to England, he attended S. Thomas’ College, Mount Lavinia in Colombo. While in England, Ondaatje pursued secondary education at Dulwich College; he then emigrated to Montreal, Quebec, in 1962. After relocating to Canada, Ondaatje studied at Bishop’s College School and Bishop’s University in Lennoxville, Quebec, for three years. In his final year he attended the University of Toronto where he received a Bachelor of Arts degree in 1965. In 1967, he received a Master of Arts from Queen’s University, Kingston, Ontario.

After his formal schooling, Ondaatje began teaching English at the University of Western Ontario in London. In 1971, reluctant to get his PhD, he left his position at Western Ontario and went on to teach English literature at Glendon College, York University.

The Collected Works of Billy the Kid, Coming Through Slaughter and Divisadero have been adapted for the stage and produced in theatrical productions across North America and Europe. In addition to The English Patient adaptation, Ondaatje’s films include a documentary on fellow poet B.P. Nichol, Sons of Captain Poetry, and The Clinton Special: A Film About The Farm Show, which chronicles a collaborative theatre experience led in 1971 by Paul Thompson of Theatre Passe Muraille. In 2002, Ondaatje published a non-fiction book, The Conversations: Walter Murch and the Art of Editing Film, which won special recognition at the 2003 American Cinema Editors Awards, as well as a Kraszna-Krausz Book Award for best book of the year on the moving image.

On 11 July 1988, Ondaatje was made an Officer of the Order of Canada which was later upgraded to grade of companion in 2016, the highest level of the order. In 2005, he was honoured with Sri Lanka Ratna by the former Sri Lankan President Chandrika Kumaratunga. Sri Lanka Ratna is the highest honour given by the Government of Sri Lanka for foreign nationals.

Since the 1960s, Ondaatje has been involved with Toronto’s Coach House Books, supporting the independent small press by working as a poetry editor. Ondaatje and his wife Linda Spalding, a novelist and academic, co-edit Brick, A Literary Journal, with Michael Redhill, Michael Helm, and Esta Spalding. In 1988, Ondaatje was made an Officer of the Order of Canada (OC) and two years later a Foreign Honorary Member of the American Academy of Arts and Letters. Ondaatje served as a founding member of the board of trustees of the Griffin Trust for Excellence in Poetry from 2000 to 2018.

Ondaatje’s work includes fiction, autobiography, poetry and film. He has published 13 books of poetry, and won the Governor General’s Award for The Collected Works of Billy the Kid (1970) and There’s a Trick With a Knife I’m Learning to Do: Poems 1973–1978 (1979). Anil’s Ghost (2000) was the winner of the 2000 Giller Prize, the Prix Médicis, the Kiriyama Pacific Rim Book Prize, the 2001 Irish Times International Fiction Prize and Canada’s Governor General’s Award. The English Patient (1992) won the Booker Prize, the Canada Australia Prize, and the Governor General’s Award. It was adapted as a motion picture, which won the Academy Award for Best Picture and multiple other awards. In the Skin of a Lion (1987), a novel about early immigrants in Toronto, was the winner of the 1988 City of Toronto Book Award, finalist for the 1987 Ritz Paris Hemingway Award for best novel of the year in English, and winner of the first Canada Reads competition in 2002.

Ondaatje’s novel Divisadero won the 2007 Governor General’s Award. In 2011 Ondaatje worked with Daniel Brooks to create a play based on this novel.

In April 2015, Ondaatje was one of several members of PEN American Center who withdrew as literary host when the organization gave its annual Freedom of Expression Courage award to Charlie Hebdo. The award came in the wake of the shooting attack on the magazine’s Paris offices in January 2015. Ondaatje and several other hosts condemned the attack on the office of Charlie Hebdo, but claimed that due to the magazine’s history of anti-Islam content it should not have been honoured.

In 2016 a new species of spider, Brignolia ondaatjei, discovered in Sri Lanka, was named after him.

In July 2018 his novel Warlight was longlisted for the Man Booker Prize.