Amrita Pritam was born as Amrit Kaur in 1919 in Gujranwala, Punjab, in present-day Pakistan, the only child of a school Teacher, a poet and a scholar of Braj Bhasha, Kartar Singh Hitkari, who also edited a literary journal. Besides this, he was a pracharak – a preacher of the Sikh faith. Amrita's mother died when she was eleven. Soon after, she and her father moved to Lahore, where she lived till her migration to India in 1947. Confronting adult responsibilities, and besieged by loneliness following her mother's death, she began to write at an early age. Her first anthology of poems, Amrit Lehran (Immortal Waves) was published in 1936, at age sixteen, the year she married Pritam Singh, an Editor to whom she was engaged in early childhood, and changed her name from Amrita Kaur to Amrita Pritam. Half a dozen collections of poems were to follow between 1936 and 1943.

In 1935, Amrita married Pritam Singh, son of a leading hosiery merchant of Lahore's Anarkali bazaar. In 1960, Amrita Pritam left her husband. She is also said to have an unrequited affection for poet Sahir Ludhianvi. The story of this love is depicted in her autobiography, Rasidi Ticket (Revenue Stamp). When another woman, singer Sudha Malhotra came into Sahir's life, Amrita found solace in the companionship of the renowned Artist and Writer Imroz. She spent the last forty years of her life with Imroz, who also designed most of her book covers and made her the subject of his several paintings. Their life together is also the subject of a book, Amrita Imroz: A Love Story.

Though she began her journey as romantic poet, soon she shifted gears, and became part of the Progressive Writers' Movement and its effect was seen in her collection, Lok Peed (People's Anguish) (1944), which openly criticized the war-torn economy, after the Bengal famine of 1943. She was also involved in social work to certain extent and participated in such activities wholeheartedly, after Independence when social Activist Guru Radha Kishan took the initiative to bring the first Janta Library in Delhi, which was inaugurated by Balraj Sahni and Aruna Asaf Ali and contributed to the occasion accordingly. This study centre cum library is still running at Clock Tower, Delhi. She also worked at Lahore Radio Station for a while, before the partition of India

Some one million people, Muslims, Hindus and Sikhs died from communal violence that followed the partition of British India in 1947, and left Amrita Pritam a Punjabi refugee at age 28, when she left Lahore and moved to New Delhi. Subsequently, in 1948, while she was pregnant with her son, and travelling from Dehradun to Delhi, she expressed anguish on a piece of paper as the poem, "Ajj akhaan Waris Shah nu" (I ask Waris Shah Today); this poem was to later immortalise her and become the most poignant reminder of the horrors of Partition. The poem addressed to the Sufi poet Waris Shah, author of the tragic saga of Heer and Ranjah and with whom she shares her birthplace.

Amrita is the first recipient of Punjab Rattan Award conferred upon her by Punjab Chief Minister Capt. Amarinder Singh. She is first woman recipient of the Sahitya Akademi Award in 1956 for Sunehadey (poetic diminutive of the word sunehe i,e.Messages), Amrita Pritam received the Bhartiya Jnanpith Award, India's highest literary award, in 1982 for Kagaj te Canvas (Paper and Canvas). She received the Padma Shri (1969) and Padma Vibhushan, India's second highest civilian award, and Sahitya Akademi Fellowship, India's highest literary award, also in 2004. She received D.Litt. honorary degrees, from many universities including, Delhi University (1973), Jabalpur University (1973) and Vishwa Bharati (1987)

Amrita Pritam worked until 1961 in the Punjabi Service of All India Radio, Delhi. After her divorce in 1960, her work became more clearly feminist. Many of her stories and poems drew on the unhappy experience of her marriage. A number of her works have been translated into English, French, Danish, Japanese, Mandarin and other languages from Punjabi and Urdu, including her autobiographical works Black Rose and Rasidi Ticket (Revenue Stamp).

She edited "Nagmani", a monthly literary magazine in Punjabi for several years, which she ran together with Imroz, for 33 years; though after Partition she wrote prolifically in Hindi as well. Later in life, she turned to Osho and wrote introductions for several books of Osho, including Ek Onkar Satnam, and also started writing on spiritual themes and dreams, producing works like Kaal Chetna (Time Consciousness) and Agyat Ka Nimantran (Call of the Unknown). She had also published autobiographies, titled, Kala Gulab (Black Rose) (1968), Rasidi Ticket (The Revenue Stamp) (1976), and Aksharon kay Saayee (Shadows of Words).

She also received International Vaptsarov Award from the Republic of Bulgaria (1979) and Degree of Officer dens, Ordre des Arts et des Lettres (Officier) by the French Government (1987). She was nominated as a member of Rajya Sabha 1986–92. Towards the end of her life, she was awarded by Pakistan's Punjabi Academy, to which she had remarked, Bade dino baad mere maike ko meri yaad aayi.. (My motherland has remembered me after a long time); and also Punjabi poets of Pakistan, sent her a chaddar, from the tombs of Waris Shah, and fellow Sufi mystic poets Bulle Shah and Sultan Bahu.

She died in her sleep on 31 October 2005 at the age of 86 in New Delhi, after a long illness. She was survived by her partner Imroz, daughter Kandala, son Navraj Kwatra, daughter-in-law Alka, and her grandchildren, Taurus, Noor, Aman and Shilpi. Navraj Kwatra was killed in 2012.

In 2007, an audio album titled, 'Amrita recited by Gulzar' was released by noted lyricist Gulzar, with poems of Amrita Pritam recited by him. A film on her life is also on the anvil.

She is most remembered for her poignant poem, Ajj aakhaan Waris Shah nu (Today I invoke Waris Shah – "Ode to Waris Shah"), an elegy to the 18th-century Punjabi poet, an expression of her anguish over massacres during the partition of India. As a Novelist, her most noted work was Pinjar (The Cage) (1950), in which she created her memorable character, Puro, an epitome of violence against women, loss of humanity and ultimate surrender to existential fate; the novel was made into an award-winning film, Pinjar in 2003.

The first of Amrita Pritam's books to be filmed was Dharti Sagar te Sippiyan, as ‘Kadambari’ (1965), followed by ‘Unah Di Kahani’, as Daaku (Dacoit, 1976), directed by Basu Bhattacharya. Her novel Pinjar (The Skeleton, 1970) narrates the story of partition riots along with the crisis of women who suffered during the times. It was made into an award-winning Hindi movie by Chandra Prakash Dwivedi, because of its humanism: "Amritaji has portrayed the suffering of people of both the countries." Pinjar was shot in a border region of Rajasthan and in Punjab.