Annie Wood was born in 1847 in London into a middle-class family of Irish origin. She was proud of her heritage and supported the cause of Irish self-rule throughout her adult life. Her Father died when she was five years old, leaving the family almost penniless. Her mother supported the family by running a boarding house for boys at Harrow School. However, she was unable to support Annie and persuaded her friend Ellen Marryat to care for her. Marryat made sure that she had a good education. Annie was given a strong sense of duty to society and an equally strong sense of what independent women could achieve. As a young woman, she was also able to travel widely in Europe. There she acquired a taste for Roman Catholic colour and ceremony that never left her.

In 1867, at age twenty, she married 26-year-old clergyman Frank Besant (1840–1917), younger brother of Walter Besant. He was an evangelical Anglican who seemed to share many of her concerns. On the eve of her marriage, she had become more politicised through a visit to friends in Manchester, who brought her into contact with both English radicals and the Manchester Martyrs of the Irish Republican Fenian Brotherhood, as well as with the conditions of the urban poor.

The subsequent family history became fragmented. A number of Besant's descendants have been traced in detail from her son Arthur Digby's side. Arthur Digby Besant (1869-1960) was President of the Institute of Actuaries, 1924-26. He wrote The Besant Pedigree (1930) and was Director of the Theosophical bookstore in London. One of Arthur Digby's daughters was Sylvia Besant, who married Commander Clem Lewis in the 1920s. They had a daughter, Kathleen Mary, born in 1934, who was given away for adoption within three weeks of the birth and had the new name of Lavinia Pollock. Lavinia married Frank Castle in 1953 and raised a family of five of Besant's great-great-grandchildren – James, Richard, David, Fiona and Andrew Castle – the last and youngest sibling being a former British professional tennis player and now television presenter and personality.

At the time, the matchstick industry was a very powerful lobby, since electric light was not yet widely available, and matches were an essential commodity; in 1872, lobbyists from the match industry had persuaded the British government to change its planned tax policy. Besant's campaign was the first time anyone had successfully challenged the match manufacturers on a major issue, and was seen as a landmark victory of the early years of British Socialism.

Soon Frank became vicar of Sibsey in Lincolnshire. Annie moved to Sibsey with her husband, and within a few years they had two children, Arthur and Mabel; however, the marriage was a disaster. As Annie wrote in her Autobiography, "we were an ill-matched pair". The first conflict came over money and Annie's independence. Annie wrote short stories, books for children, and articles. As married women did not have the legal right to own property, Frank was able to collect all the money she earned. Politics further divided the couple. Annie began to support farm workers who were fighting to unionise and to win better conditions. Frank was a Tory and sided with the landlords and farmers. The tension came to a head when Annie refused to attend Communion. In 1873 she left him and returned to London. They were legally separated and Annie took her daughter with her.

Besant and Bradlaugh became household names in 1877 when they published Fruits of Philosophy, a book by the American birth-control campaigner Charles Knowlton. It claimed that working-class families could never be happy until they were able to decide how many children they wanted. It also suggested ways to limit the size of their families. The Knowlton book was highly controversial, and was vigorously opposed by the Church. Besant and Bradlaugh proclaimed in the National Reformer:

For Besant, politics, friendship and love were always closely intertwined. Her decision in favour of Socialism came about through a close relationship with George Bernard Shaw, a struggling young Irish author living in London, and a leading light of the Fabian Society. Annie was impressed by his work and grew very close to him too in the early 1880s. It was Besant who made the first move, by inviting Shaw to live with her. This he refused, but it was Shaw who sponsored Besant to join the Fabian Society. In its early days, the society was a gathering of people exploring spiritual, rather than political, alternatives to the capitalist system. Besant began to write for the Fabians. This new commitment – and her relationship with Shaw – deepened the split between Besant and Bradlaugh, who was an individualist and opposed to Socialism of any sort. While he defended free speech at any cost, he was very cautious about encouraging working-class militancy.

Bradlaugh's political prospects were not damaged by the Knowlton scandal and he was elected to Parliament in 1881. Because of his atheism, he asked to be allowed to affirm rather than swear the oath of loyalty. When the possibility of affirmation was refused, Bradlaugh stated his willingness to take the oath. But this option was also challenged. Although many Christians were shocked by Bradlaugh, others (like the Liberal leader Gladstone) spoke up for freedom of belief. It took more than six years before the matter was completely resolved (in Bradlaugh's favour) after a series of by-elections and court appearances.

During 1884, Besant had developed a very close friendship with Edward Aveling, a young socialist Teacher who lived in her house for a time. Aveling was a scholarly figure and it was he who first translated the important works of Marx into English. He eventually went to live with Eleanor Marx, daughter of Karl Marx. Aveling was a great influence on Besant's thinking and she supported his work, yet she moved towards the rival Fabians at that time. Aveling and Eleanor Marx had joined the Marxist Social Democratic Federation and then the Socialist League, a small Marxist splinter group which formed around the Artist william Morris.

Unemployment was a central issue of the time, and in 1887 some of the London unemployed started to hold protests in Trafalgar Square. Besant agreed to appear as a speaker at a meeting on 13 November. The police tried to stop the assembly, fighting broke out, and troops were called. Many were hurt, one man died, and hundreds were arrested; Besant offered herself for arrest, an offer disregarded by the police.

Soon after joining the Marxists, Besant was elected to the London School Board in 1888. Women at that time were not able to take part in parliamentary politics, but had been brought into the local electorate in 1881.

Blavatsky had stated in 1889 that the main purpose of establishing the society was to prepare humanity for the Future reception of a "torch-bearer of Truth", an emissary of a hidden Spiritual Hierarchy that, according to theosophists, guides the evolution of mankind. This was repeated by Besant as early as 1896; Besant came to believe in the imminent appearance of the "emissary", who was identified by theosophists as the so-called World Teacher.

In 1890 Besant met Helena Blavatsky and over the next few years her interest in Theosophy grew while her interest in secular matters waned. She became a member of the Theosophical Society and a prominent lecturer on the subject. As part of her theosophy-related work, she travelled to India. In 1898 she helped establish the Central Hindu College and in 1922 she helped establish the Hyderabad (Sind) National Collegiate Board in Mumbai, India. In 1902, she established the first overseas Lodge of the International Order of Co-Freemasonry, Le Droit Humain. Over the next few years she established lodges in many parts of the British Empire. In 1907 she became President of the Theosophical Society, whose international headquarters were in Adyar, Madras, (Chennai).

In 1893, soon after becoming a member of the Theosophical Society she went to India for the first time. After a dispute the American section split away into an independent organisation. The original society, then led by Henry Steel Olcott and Besant, is today based in Chennai, India, and is known as the Theosophical Society Adyar. Following the split Besant devoted much of her Energy not only to the society, but also to India's freedom and progress. Besant Nagar, a neighbourhood near the Theosophical Society in Chennai, is named in her honour.

Besant met fellow theosophist Charles Webster Leadbeater in London in April 1894. They became close co-workers in the theosophical movement and would remain so for the rest of their lives. Leadbeater claimed clairvoyance and reputedly helped Besant become clairvoyant herself in the following year. In a letter dated 25 August 1895 to Francisca Arundale, Leadbeater narrates how Besant became clairvoyant. Together they clairvoyantly investigated the universe, matter, thought-forms, and the history of mankind, and co-authored a book called Occult Chemistry.

The link was made in 1902 by the theosophist Francesca Arundale, who accompanied Besant to Paris, along with six friends. "They were all initiated, passed and raised into the first three degrees and Annie returned to England, bearing a Charter and founded there the first Lodge of International Mixed Masonry, Le Droit Humain." Besant eventually became the Order's Most Puissant Grand Commander, and was a major influence in the international growth of the Order.

In 1906 Leadbeater became the centre of controversy when it emerged that he had advised the practice of masturbation to some boys under his care and spiritual instruction. Leadbeater stated he had encouraged the practice to keep the boys celibate, which was considered a prerequisite for advancement on the spiritual path. Because of the controversy, he offered to resign from the Theosophical Society in 1906, which was accepted. The next year Besant became President of the society and in 1908, with her express support, Leadbeater was readmitted to the society. Leadbeater went on to face accusations of improper relations with boys, but none of the accusations were ever proven and Besant never deserted him.

In 1909, soon after Besant's assumption of the presidency, Leadbeater "discovered" fourteen-year-old Jiddu Krishnamurti (1895–1986), a South Indian boy who had been living, with his Father and brother, on the grounds of the headquarters of the Theosophical Society at Adyar, and declared him the probable "vehicle" for the expected "World Teacher". The "discovery" and its objective received widespread publicity and attracted worldwide following, mainly among theosophists. It also started years of upheaval, and contributed to splits in the Theosophical Society and doctrinal schisms in Theosophy. Following the discovery, Jiddu Krishnamurti and his younger brother Nityananda ("Nitya") were placed under the care of theosophists and Krishnamurti was extensively groomed for his Future mission as the new vehicle for the "World Teacher". Besant soon became the boys' legal guardian with the consent of their Father, who was very poor and could not take care of them. However, his Father later changed his mind and began a legal battle to regain the guardianship, against the will of the boys. Early in their relationship, Krishnamurti and Besant had developed a very close bond and he considered her a surrogate mother – a role she happily accepted. (His biological mother had died when he was ten years old).

In 1914 World War I broke out, and Britain asked for the support of its Empire in the fight against Germany. Echoing an Irish nationalist slogan, Besant declared, "England's need is India's opportunity". As Editor of the New India newspaper, she attacked the colonial government of India and called for clear and decisive moves towards self-rule. As with Ireland, the government refused to discuss any changes while the war lasted.

In 1916 Besant launched the All India Home Rule League along with Lokmanya Tilak, once again modelling demands for India on Irish nationalist practices. This was the first political party in India to have regime change as its main goal. Unlike the Congress itself, the League worked all year round. It built a structure of local branches, enabling it to mobilise demonstrations, public meetings and agitations. In June 1917 Besant was arrested and interned at a hill station, where she defiantly flew a red and green flag. The Congress and the Muslim League together threatened to launch protests if she were not set free; Besant's arrest had created a focus for protest.

The government was forced to give way and to make vague but significant concessions. It was announced that the ultimate aim of British rule was Indian self-government, and moves in that direction were promised. Besant was freed in September 1917, welcomed by crowds all over India, and in December she took over as President of the Indian National Congress for a year.

In 1929, twenty years after his "discovery", Krishnamurti, who had grown disenchanted with the World Teacher Project, repudiated the role that many theosophists expected him to fulfil. He dissolved the Order of the Star in the East, an organisation founded to assist the World Teacher in his mission, and eventually left the Theosophical Society and Theosophy at large. He spent the rest of his life travelling the world as an unaffiliated speaker, becoming in the process widely known as an original, independent thinker on philosophical, psychological, and spiritual subjects. His love for Besant never waned, as also was the case with Besant's feelings towards him; concerned for his wellbeing after he declared his independence, she had purchased 6 acres (2.4 ha) of land near the Theosophical Society estate which later became the headquarters of the Krishnamurti Foundation India .

Besant died on 20 September 1933, at age 85, in Adyar, Madras Presidency, British India. Her body was cremated.

After the war, a new leadership of the Indian National Congress emerged around Mohandas K. Gandhi – one of those who had written to demand Besant's release. He was a Lawyer who had returned from leading Asians in a peaceful struggle against racism in South Africa. Jawaharlal Nehru, Gandhi's closest collaborator, had been educated by a theosophist tutor.