She was born on February 2, 1923 in New York City, the daughter of Rosina (née Timponi; 1892-1984) and Bernard "Bunny" Granville. Both of her parents were stage performers. She was raised Roman Catholic.

She made her film debut at the age of nine in Westward Passage (1933), and appeared that same year in a credited but nearly wordless supporting role as the young Dancer Fanny Bridges in Cavalcade, which won the Academy Award for Best Picture. Over the next few years, she played uncredited supporting roles in such films as Little Women (1933) and Anne of Green Gables (1934). She next played the role of Mary Tilford in the 1936 film adaptation of Lillian Hellman's 1934 stage play The Children's Hour. Renamed These Three, the film told the story of three adults (played by Miriam Hopkins, Merle Oberon, and Joel McCrea) who find their lives almost destroyed by the malicious lies of an evil, attention-seeking child. For her role as that child, Granville was nominated for an Academy Award for Best Supporting Actress, then the youngest person to be nominated for that award. Despite this success, and although she continued to work, the next few years brought her few opportunities to build her career.

In 1938, she starred as the saucy, mischievous daughter in the multiple Academy Award-nominated hit comedy film Merrily We Live and as girl detective Nancy Drew in the hit film Nancy Drew... Detective. The Nancy Drew film success led to Granville reprising the role in three sequels from 1938 to 1939, including Nancy Drew... Reporter (1939).

She was the heroine of the novel Bonita Granville and the Mystery of Star Island written by Kathryn Heisenfelt, published by Whitman Publishing Company in 1942. The novel's subtitle is "An original story featuring BONITA GRANVILLE famous motion-picture player as the heroine". The story was probably written for a young teenage audience and is reminiscent of the adventures of Nancy Drew. It is part of a series known as "Whitman Authorized Editions", 16 books published between 1941-1947 that featured a film Actress as heroine.

On February 5, 1947 Granville married Jack Wrather at the Bel-Air Hotel. He had produced some of her films. He formed the Wrather Corporation, and bought the rights to characters from both The Lone Ranger and Lassie. Granville worked as a Producer for several film and television productions featuring these characters, including the 1954 TV series Lassie. She appeared in the film version of The Lone Ranger in 1956, and made her final screen appearance in a cameo role in The Legend of the Lone Ranger (1981). Their children are daughters Molly and Linda, and sons Jack and Christopher. Jack and Molly were from Wrather's previous marriage to Mollie O'Daniel, a daughter of Governor of Texas and U.S. Senator W. Lee O'Daniel.

In 1949, she appeared with Rod Cameron in the comedy film Strike It Rich, filmed about Tyler, Kilgore, and Linda Le in East Texas.

The marriage lasted until Wrather's death in 1984, shortly after release of the movie The Magic of Lassie, which starred Wrather's pal James Stewart.

Granville died on October 11, 1988 of lung cancer at Saint John's Health Center in Santa Monica, California, at the age of 65. She was buried at the Holy Cross Cemetery in Culver City, California.