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Churchill was born in London, England. During World War II her family emigrated to Montreal, Canada, where she attended Trafalgar School for Girls. She returned to England to attend university, and graduated from Lady Margaret Hall, Oxford in 1960 with a degree in English Literature. She also began her career there, writing three plays for performance by student drama groups: Downstairs, You've No Need to be Frightened and Having a Wonderful Time.
In 1961 she married David Harter, a lawyer also from Oxford, and began raising three sons. She also began to write short radio plays for the BBC including The Ants (1962), Not, Not, Not, Not Enough Oxygen (1971), and Schreber's Nervous Illness (1972).
Churchill wrote Owners, her first stage play, in 1972. Churchill's basic socialist views are very apparent in the play, which is a critique of the values that most capitalists take for granted: being aggressive, getting ahead, doing well. She served as resident dramatist at the Royal Court Theatre from 1974-1975, and later began collaboration with theatre companies such as Joint Stock Theatre Company and Monstrous Regiment (a feminist theatre union) which used an extended workshop period in their development of new plays. Churchill continued to use an improvisational workshop setting in the development of some of her plays.
Her first play to receive wide notice was Cloud Nine (1979), set partly in a British Colony in the Victorian era, which examines the relationships involved in colonization, and utilizes cross-gender casting for comic and instructive effect.
In time Churchill's writing became less and less inhibited by realism, and the feminist themes were also developed. Top Girls (1982) has an all-female cast, and focuses on Marlene, who has sacrificed a home and family life to achieve success in the world of business. Half the action takes place at a celebratory dinner where Marlene mixes with historical and fictional women who achieved success in a man's world, but always at some cost; the other half in Marlene's family, where the cost is being paid. In The Skriker (1994), Churchill utilizes an associative dream logic which some critics found to be nonsensical. The play, a visionary exploration of modern urban life, follows the Skriker, a kind of northern goblin, in its search for love and revenge as it pursues two young women to London, changing its shape at every new encounter.
Serious Money (1987) is a verse play that takes a satirical look at the stock market, and received enormous acclaim, partly because it played immediately after the stock market crash of 1987. Her 2002 play, A Number, addresses the subject of human cloning. Churchill also wrote television plays for the BBC, and those and some of her radio plays were later adapted for the stage.