Yonath (née Lifshitz) was born in the Geula quarter of Jerusalem. Her parents, Hillel and Esther Lifshitz, were Zionist Jews who immigrated to Palestine from Zduńska Wola, Poland in 1933 before the establishment of Israel. Her Father was a rabbi and came from a rabbinical family. They settled in Jerusalem and ran a grocery, but found it difficult to make ends meet. They lived in cramped quarters with several other families, and Yonath remembers "books" being the only thing she had to keep her occupied. Despite their poverty, her parents sent her to school in the upscale Beit HaKerem neighborhood to assure her a good education. When her Father died at the age of 42, the family moved to Tel Aviv. Yonath was accepted to Tichon Hadash high school although her mother could not pay the tuition. She gave math lessons to students in return. As a youngster, she says she was inspired by the Polish and naturalized-French scientist Marie Curie. However, she stresses that Curie, whom she as a child was fascinated by after reading a well-written biography, was not her "role model". She returned to Jerusalem for college, graduating from the Hebrew University of Jerusalem with a bachelor's degree in chemistry in 1962, and a master's degree in biochemistry in 1964. In 1968, she obtained her Ph.D. from the Weizmann Institute of Science for X-ray crystallographic studies on the structure of collagen, with Wolfie Traub as her Ph.D. advisor.

Yonath accepted postdoctoral positions at Carnegie Mellon University (1969) and MIT (1970). While a postdoc at MIT she spent some time in the lab of subsequent 1976 chemistry Nobel Prize winner william N. Lipscomb, Jr. of Harvard University where she was inspired to pursue very large structures.

In 1970, she established what was for nearly a decade the only protein crystallography laboratory in Israel. Then, from 1979 to 1984 she was a group leader with Heinz-Günter Wittmann at the Max Planck Institute for Molecular Genetics in Berlin. She was visiting professor at the University of Chicago in 1977-78. She headed a Max-Planck Institute Research Unit at DESY in Hamburg, Germany (1986–2004) in parallel to her research activities at the Weizmann Institute.

Yonath focuses on the mechanisms underlying protein biosynthesis, by ribosomal crystallography, a research line she pioneered over twenty years ago despite considerable skepticism of the international scientific community. Ribosomes translate RNA into protein and because they have slightly different structures in microbes, when compared to eukaryotes, such as human cells, they are often a target for antibiotics. In 2000 and 2001, she determined the complete high-resolution structures of both ribosomal subunits and discovered within the otherwise asymmetric ribosome, the universal symmetrical region that provides the framework and navigates the process of polypeptide polymerization. Consequently, she showed that the ribosome is a ribozyme that places its substrates in stereochemistry suitable for peptide bond formation and for substrate-mediated catalysis. In 1993 she visualized the path taken by the nascent proteins, namely the ribosomal tunnel, and recently revealed the dynamics elements enabling its involvement in elongation arrest, gating, intra-cellular regulation and nascent chain trafficking into their folding space.

In 2009, she received the Nobel Prize in Chemistry along with Venkatraman Ramakrishnan and Thomas A. Steitz for her studies on the structure and function of the ribosome, becoming the first Israeli woman to win the Nobel Prize out of ten Israeli Nobel laureates, the first woman from the Middle East to win a Nobel prize in the sciences, and the first woman in 45 years to win the Nobel Prize for Chemistry.

Yonath is a member of the United States National Academy of Sciences; the American Academy of Arts and Sciences; the Israel Academy of Sciences and Humanities; the European Academy of Sciences and Art and the European Molecular Biology Organization. On Saturday, 18 October 2014, Professor Yonath was named an ordinary member of the Pontifical Academy of Sciences by Pope Francis.