Simon was raised in the Riverdale neighborhood of the Bronx, New York City and has two older sisters, Joanna (b. 1940) and Lucy (b. 1943), and a younger brother, Peter (b. 1947). They were raised as nominal Catholics, according to a book of photography Peter published in the late 1990s. She attended Riverdale Country School. She also briefly attended Sarah Lawrence College before dropping out to pursue music.

Prior to her marriage to Taylor, Simon was briefly engaged to william Donaldson in the 1960s (who jilted fiancée Sarah Miles for her). Donaldson described her as "the answer to any sane man's prayers; funny, quick, erotic, extravagantly talented." She also was engaged to musician Russ Kunkel, from 1985 to 1986.

Simon's career began with a short-lived music group with her sister Lucy as the Simon Sisters. They had a minor hit in 1964 called "Winkin', Blinkin' and Nod", the lead single from their debut album Meet The Simon Sisters. Their second album, Cuddlebug, followed later that year. The duo made one more album together, 1969's The Simon Sisters Sing the Lobster Quadrille and Other Songs for Children, before Lucy left to get married and start a family. Later, Carly collaborated with eclectic New York rockers Elephant's Memory for about six months. She also appeared in the 1971 Miloš Forman film Taking Off, playing an auditioning singer, and sang "Long Term Physical Effects", which was included in the 1971 Soundtrack for the film.

Simon was signed by Jac Holzman to Elektra Records in 1970. She released her self-titled debut album, Carly Simon, in March 1971. The album contained her breakthrough top-ten hit "That's the Way I've Always Heard It Should Be". The album peaked at No. 30 and the single peaked at No. 10 on the Billboard charts. Her second album, Anticipation, came November of that same year. Like its predecessor, the album peaked at No. 30, and its lead single, also titled "Anticipation", became a significant hit, reaching No. 3 at Easy Listening radio and No. 13 on Billboard's Pop singles chart. It is perhaps even more famous for its use in a variety of international commercials to market the thick ketchup of the H. J. Heinz Company. The single was written in 15 minutes while Simon waited for Cat Stevens to pick her up for a date. The pair had become romantically involved shortly after Simon had opened for Stevens at L.A.'s Troubadour around the time her debut album was released.

Besides music, Simon also appeared in films, such as the 1971 Miloš Forman film Taking Off, in which she played an auditioning singer. Other film appearances (as herself) include the 1985 film Perfect, and an uncredited appearance in the 2004 film Little Black Book. On television, she appeared (also as herself) in a 1989 episode of Thirtysomething, and was a guest-caller named Marie on a 1995 episode of Frasier entitled "Roz in the Doghouse". She also appeared in a 2013 episode of Family Guy entitled Total Recall, and on a 2014 episode of Bob's Burgers entitled "Work Hard or Die Trying, Girl". Simon sang the outro song.

Simon married fellow singer-songwriter James Taylor on November 3, 1972. Simon and Taylor had two children, Sarah "Sally" Maria Taylor (born January 7, 1974) and Benjamin "Ben" Simon Taylor (born January 22, 1977), both of whom are Musicians and political Activists. They divorced in 1983.

Later in 1973, the follow-up single, "The Right Thing to Do", was another sizable hit, reaching No. 4 Adult Contemporary and No. 17 Pop. That same year Simon performed on Lee Clayton's album Lee Clayton and co-sang on the song "New York Suite 409" and on Livingston Taylor's album Over the Rainbow and sang with both Livingston and his famous brother, James Taylor (who was, by then, her husband) on the songs "Loving Be My New Horizon" and "Pretty Woman".

Simon is one of the various artists mentioned in the 1974 Reunion song "Life Is a Rock (But the Radio Rolled Me)."

Simon's record sales declined considerably with 1975's Playing Possum and 1976's Another Passenger. Playing Possum was a Top Ten album, and garnered a successful Top 40 single "Attitude Dancing" and two other charting singles, but its racy album cover, which depicts Simon wearing only a black negligee and knee-high black boots, generated controversy. In 1991, Rolling Stone ranked it No. 20 on their list of the 100 greatest album covers. Another Passenger produced only one charting single on the Pop singles chart, "It Keeps You Runnin'", with the Doobie Brothers, which peaked just outside the Top 40, at No. 46, and the second single, "Half A Chance", only charted on the Adult Contemporary chart. Despite the lukewarm commercial reception, the album was, and remains, one of Simon's best reviewed works, with Rolling Stone calling it "Carly Simon's best record". The album became a favorite among many of Simon's fans. 1976 also saw Simon contributing backup vocals on the song "Peter" on Peter Ivers's album Peter Ivers. She also made her only appearance on Saturday Night Live. It was a pre-taped performance—a rare occurrence on that show—because Simon suffered terrible bouts of stage fright. In the appearance, she sang two songs: "Half A Chance" and her signature song, "You're So Vain".

In 1977, Simon had a surprise international hit with the million-selling gold single "Nobody Does It Better", the theme to the James Bond film The Spy Who Loved Me. Simon's second-biggest U.S. hit, after "You're So Vain", was 1977's biggest Adult Contemporary hit, where it held at No. 1 for seven straight weeks. The single peaked one step behind Debby Boone's mega-hit "You Light Up My Life" on Billboard's Pop Singles chart from October 22 to November 5, 1977 and received Grammy nominations for Song of the Year and Best Pop Vocal Performance, Female. In 2012, Rolling Stone ranked it the 3rd greatest James Bond theme song. Billboard ranked it No. 2 on their list that same year. Also in 1977, Simon co-produced Libby Titus's album Libby Titus and sang backup on two songs: "Can This Be Our Love Affair?" and "Darkness 'Til Dawn", the later which comes from Simon's Another Passenger.

On November 2, 1978, Simon guested on the song "I Live in the Woods" at a live, four-hour concert by Burt Bacharach and the Houston Symphony Orchestra at Jones Hall in Houston, Texas. All the songs at that concert became Bacharach's album Woman, which was released in 1979. That year, shortly after the Three Mile Island nuclear accident, from September 19 to 22, a series of concerts were held at New York City's Madison Square Garden and sponsored by Musicians United for Safe Energy (MUSE), a group of Musicians against nuclear power, co-founded by John Hall. Always politically active, Simon and James Taylor were part of the concerts which later became a documentary and concert film, No Nukes (1980), as well as a live album of the same name (1979).

In 1979, Simon released her last album for Elektra, entitled Spy. The albums sales were a disappointment, peaking at only No. 45 on the Pop albums chart, although a harder-edged single from the album, "Vengeance", became a modest hit and received airplay on U.S. album rock stations, and peaked at No. 48 on the Pop singles chart. "Vengeance" earned Simon a Grammy nomination for Best Rock Vocal Performance, Female in early 1980—the first year to feature the new category. The album also features a track entitled "Never Been Gone", which became a fan favorite, as well as one of her personal favorites. In 2009, she released an album entitled after the track.

Throughout the 1980s, Simon successfully contributed to several film and television scores, including the songs:

Torch (1981) was an album of melancholy jazz standards, but suffered from disappointing sales, peaking at No. 50 on the charts. The album was well received critically, and featured one original song by Simon, "From The Heart", as well as a cover of Stephen Sondheim's "Not a Day Goes By" from his musical Merrily We Roll Along. Also in 1981, Carly Simon was the second female solo Artist to be featured on MTV's first day of the air in her video for "Vengeance" (Pat Benatar was the first female solo Artist to appear on MTV, and Juice Newton was the third).

In 1982, she sang the Nile Rodgers & Bernard Edwards-produced single "Why", which was the Soundtrack to the film Soup for One. It was a top-ten hit in the U.K. and successful throughout Europe. Although "Why" stalled at No. 74 in the U.S., the song became a mellow classic in the aftermath of its being picked up to be covered and sampled by different artists from around 1989 onwards. She had another U.K. success with the single "Kissing with Confidence", a song from the 1983 album Dancing For Mental Health by Will Powers (a pseudonym for Photographer Lynn Goldsmith). Simon was the uncredited singer of the song co-written and mixed by Todd Rundgren.

In 1983, she made her last album for Warner, Hello Big Man, but this also suffered from disappointing sales; it did, however, receive positive critical recognition. The lead single from the album, "You Know What to Do", peaked at No. 83 on the Pop singles chart, and Simon filmed a music video for it at her home on Martha's Vineyard, MA. That same year, Simon performed on two albums, The Perfect Stranger by Jesse Colin Young (singing on the track "Fight For It" with Young) and Wonderland by Nils Lofgren (singing on the track "Lonesome Ranger" with Lofgren). By this time, her contract with Warner Bros. had ended. In 1985, she signed with Epic Records and made one album for them, Spoiled Girl. The album yielded two singles, "Tired of Being Blonde" and "My New Boyfriend", with only the former charting. The album was commercially unsuccessful and her contract with Epic was cancelled.

As a tribute to Christa McAuliffe, who was slated to be the first Teacher in space and who died in the 1986 Space Shuttle Challenger disaster, Simon wrote and recorded a song entitled "You're Where I Go". McAuliffe was a Simon fan and had taken a cassette of her music on board the shuttle. In 1987, Simon also sang the theme for the 1988 Democratic National Convention, "The Turn of the Tide", for a Marlo Thomas television special Free to Be... a Family. The song was later included on the 1988 Soundtrack album of the same name on A&M Records.

Simon married James Hart, a Writer, poet and businessman, on December 23, 1987. The couple divorced in 2007.

The Coming Around Again album also featured the Top 10 Adult Contemporary hits "Give Me All Night", "The Stuff That Dreams Are Made Of", "All I Want Is You" (which featured Roberta Flack on backing vocals), and a cover of "As Time Goes By" (featuring Stevie Wonder on harmonica). The album itself was her first Gold release in nine years, and went Platinum in 1988. In October 2017, Hot Shot Records released a 2 disc 30th Anniversary deluxe edition of the album. These and older songs were featured in a picturesque HBO concert special entitled Live from Martha's Vineyard, where Simon and her band performed live on a pier. Most of these songs were compiled for her 1988 album, Greatest Hits Live. The album continued her mounting comeback, quickly going Gold, and was later certified Platinum by the RIAA in 1996. From Live a recording of Simon's evergreen "You're So Vain" was released as a single in the UK.

During the 1990s, the American press reported an incident between Simon and the Pretenders' vocalist Chrissie Hynde, at a Joni Mitchell concert at New York's Fez Club. Some reports stated that a drunk and disorderly Hynde grabbed Simon around the neck and punched her, although Simon attempted to put these rumors to rest on her official website in 2002. Numerous witnesses, however, claim that Simon was, indeed, assaulted by Hynde.

In 1992, Simon wrote the music for the Nora Ephron film This Is My Life, which included the song "Love of My Life", a No. 16 Adult Contemporary hit. In 1993, she contributed the song "In the Wee Small Hours of the Morning" for the film Sleepless in Seattle and recorded the same song in combo with "Guess I'll Hang My Tears Out to Dry" with Frank Sinatra for his album Duets. By this point, Sinatra was in no shape to record, so the feat was accomplished by producers lifting an isolated prerecorded vocal track from an earlier performance and laying a new background – and Simon – behind it.

In 1993, Simon was commissioned by the Metropolitan Opera Association and the Kennedy Center to record a contemporary opera that would appeal to younger people. The result was Romulus Hunt (named after its 12-year-old protagonist), released in November of that year. In December 2014, the Nashville Opera Association premiered a new performance edition of the opera. She also published her fourth children's book, The Nighttime Chauffeur. Simon also contributed to Andreas Vollenweider's album Eolian Minstrel, she co-wrote the song "Private Fires" with Vollenweider and was featured vocalist on the song.

In 1994, she covered the song "Take Me Out to the Ball Game" for Ken Burns' film Baseball, as well as a recording of "I've Got a Crush on You" for Larry Adler's covers album The Glory of Gershwin. That same year, Simon recorded and released another album of original songs, Letters Never Sent. The album originated from Simon finding an old box of letters that she'd written, but never mailed, and she set a handful of them to music. "The Night Before Christmas", from the Soundtrack to This Is My Life, was also used in the film Mixed Nuts.

Simon performed a duet with Mindy Jostyn on the song "Time, Be on My Side", which featured on Jostyn's 1995 album Five Miles From Hope about her recent battle with colon cancer. Ten years later, Jostyn died from the disease at the age of 43. 1995 also saw the release of Simon's Clouds in My Coffee, a 3 disc boxed set of highlights from her 30-year career from 1965 to 1995.

Simon continued to write and record music for films and wrote the theme songs to several more movies, including "Two Little Sisters" from 1996's Marvin's Room and "In Two Straight Lines" from 1998's Madeline. 1997 saw the release of Simon's third standards album, Film Noir, which was recorded in collaboration with Jimmy Webb and for which she was nominated for the Grammy Award for Best Traditional Pop Vocal Performance. John Travolta dueted with Simon on the track Two Sleepy People and film Director Martin Scorsese wrote the booklets liner notes. She also released her fifth children's book, "Midnight Farm". Simon was diagnosed with breast cancer in 1997, and underwent surgery that year, as well as chemotherapy. In 1999 The Very Best of Carly Simon: Nobody Does It Better, a UK-only greatest hits album, was released. Also that year, Simon worked again with the Swiss musician Andreas Vollenweider, and was the featured vocalist for the song "Your Silver Key" on Vollenweider's album Cosmopoly.

Simon underwent a mastectomy, chemotherapy and reconstructive surgery for breast cancer during 1997 and 1998. There had been a lump in her breast for several years before then, but her doctors had advised her against surgery. Simon later recounted: "Then one Doctor said, 'You know what, I'd rather see it in a jar than in your breast.'" She also said that she felt "a little angry with myself" over the fact that she did not insist on taking it out sooner. Simon's surgery came at the same time as the death of her longtime friend Linda McCartney, who had also struggled with breast cancer. Simon described McCartney's death as having emotionally "crushed" her.

Groovie Ghoulies recorded a song simply titled "Carly Simon", which was released on their 1999 album Fun in the Dark.

On May 16, 2000, Simon released the album The Bedroom Tapes, largely written and recorded at home in her bedroom while she was recuperating from her health problems of the previous couple of years. The Bedroom Tapes was Simon's first album of original songs in almost six years; despite this, it did not sell well. The album was widely acclaimed by critics, with AllMusic writing "She is as a raw as she was on 1975's Playing Possum and just as sweet as 1987's Coming Around Again, but Simon is fresh. Although in her mid-fifties, she is still a charmer." Billboard called the album "A feast for fans of intelligent, richly crafted pop music" and People wrote that the album "unfolds like a one-woman show," calling it a "Boffo performance." One of the album's tracks, "Our Affair", was remixed and featured in the Gwyneth Paltrow/Ben Affleck film Bounce.

In 2001, Simon performed on "Son of a Gun" with Janet Jackson on Jackson's album All for You; the song was released as a single and peaked at No. 28 on the Billboard Hot 100. She also contributed back-up vocals on two songs, "Don't Turn Away" and "East of Eden", for Mindy Jostyn's 2001 album Blue Stories. In November 2001, Simon's Oscar-winning song "Let the River Run" was used in a public Service ad for the United States Postal Service. Entitled "Pride", it was produced to boost public confidence and postal worker morale in the wake of the September 11, 2001, attacks and the 2001 anthrax attacks.

In 2002, Simon recorded a Christmas album, Christmas Is Almost Here, for Rhino Records, while she was in Los Angeles to lend support to her son Ben Taylor and his band. That same year, Simon personally chose all of the songs for a new two-disc anthology album, simply titled Anthology, also for Rhino Records. 2003 saw a re-release of her 2002 Christmas album with two extra tracks and now called Christmas Is Almost Here Again on Rhino Records. The two extra tracks, "White Christmas" (with Burt Bacharach) and "Forgive", were also released as a single. She also performed several concerts during the 2004 holiday season at Harlem's Apollo Theater, along with BeBe Winans, son Ben and daughter Sally, Rob Thomas, Livingston Taylor, Mindy Jostyn and Kate Taylor, along with other members of the Taylor and Simon family.

"Anticipation" was covered by Mandy Moore on her 2003 album Coverage. Fred Astaire covered "Attitude Dancing" on his 1975 album of the same name. Anita Baker covered "You Belong to Me" for the 1990 album Rubáiyát: Elektra's 40th Anniversary, and latter included it on her album Rhythm of Love, released in 1994. Jennifer Lopez also covered the song, on her 2002 album This Is Me... Then. Amy Grant covered "The Night Before Christmas" on her 1992 holiday album Home For Christmas. In 2013, Walled City Records in association with Iris Records and Derry City Council released a cover of "Let the River Run" performed by Máiréad Carlin and Damian McGinty.

In 2005, she released her fourth album of standards, titled Moonlight Serenade. A surprise hit, it reached No. 7 on the Billboard Album charts, her highest-charting album since Boys in the Trees, and she was nominated for the Grammy Award for Best Traditional Pop Vocal Album. To promote Moonlight Serenade, Simon performed two concerts on board the RMS Queen Mary 2 which were recorded and released on DVD in 2005 as A Moonlight Serenade on the Queen Mary 2. Accompanied by her children, Sally and Ben, Simon embarked on a concert tour across the United States—her first tour in 10 years, entitled The Serenade Tour. She also sang a duet, "Angel of the Darkest Night", with Mindy Jostyn on Jostyn's 2005 album Coming Home. The album was released several months after Jostyn's death on March 10, 2005. One of Simon's closest friends, Jostyn was married to Jacob Brackman, Simon's long-time friend and musical collaborator. In 2005, Simon became involved in the legal defense of musician and family friend John Forté with his struggle against a federal incarceration.

Simon has been close friends with James Taylor's younger brother Livingston Taylor for over forty years. Livingston said, "I love Carly and Carly loves me. She's a ferocious advocate and supporter of my music." They have worked as a musical duo for some songs such as "Best of Friends", released in Livingston's 2006 album There You Are Again, and others earlier in their careers.

In June 2004, Simon said that she no longer speaks to her ex-husband, James Taylor. "I would say our relationship is non-existent. It's not the way I want it." On October 4, 2007, Simon became a grandmother when her daughter, Sally, gave birth to a son, Bodhi Taylor Bragonier.

Adam Sandler covered "Nobody Does It Better" before receiving the MTV Generation Award on the 2008 MTV Movie Awards (the words were modified to reflect Sandler). Celine Dion also performed the song as part of her self-titled show in Las Vegas. Radiohead used to perform the song as part of their set during the mid-90s. Bobby Brown covered the song with Whitney Houston on his 1997 album Forever.

In October 2009, Simon released Never Been Gone, an album of acoustic reworkings of some of her classic songs. The album was released via Iris Records. On November 26, 2009, Simon appeared on the Care Bears float of the 83rd Annual Macy's Thanksgiving Day Parade, where she sang "Let the River Run".

In May 2010, Simon revealed she had been one of the several celebrities who fell victim to financial advisor Kenneth I. Starr, whose Ponzi scheme lured her into "investing" millions of dollars with him, which she lost.

On July 27, 2013, in Foxborough, Massachusetts, Simon performed "You're So Vain" with Taylor Swift on her Red Tour. Swift had previously cited Simon as a musical influence and "You're So Vain" as one of her favorite songs.

In 1972–73 Simon scored the biggest success of her career with "You're So Vain". It hit No. 1 on the U.S. Pop and Adult Contemporary charts, and sold over a million copies in the United States alone. It was one of the decade's biggest hits and propelled Simon's breakthrough album No Secrets to No. 1 on the U.S. album charts, where it stayed for five consecutive weeks. The album achieved Gold status that year, but by the album's 25th anniversary in 1997, the album had been certified Platinum. "You're So Vain" received Grammy Award nominations for Record of the Year, Song of the Year, and Best Pop Vocal Performance, Female. Additionally, in 2008, it was listed at No. 72 on the Billboard Hot 100's list of the top 100 songs from the chart's first 50 years, August 1958 through July 2008. On August 23, 2014, the U.K. Official Charts Company crowned it the ultimate song of the 1970s.

On November 24, 2015, Simon published Boys in the Trees: A Memoir, an autobiographical book focusing on her childhood and her early life, from age five until thirty-five. The two-disc compilation album Songs From The Trees (A Musical Memoir Collection) was simultaneously released along with the book.

In April 2017 Simon featured on the Gorillaz album Humanz on the track "Ticker Tape"

In 2018, Carly Simon, at 72, came to term with the Universal Music Publishing Group, signing herself as a singer.

Tori Amos cited Simon as an influence, and often covers "Boys in the Trees" in concert. "I used to Listen to this song over and over, wishing I’d wrote it," Amos once said of the track. At the 2012 ASCAP awards, where Simon received the Founders Award, Natalie Maines stated "I grew up listening to Carly Simon, she was a huge influence on me." Maines then performed "That's the Way I've Always Heard It Should Be", which she said was one of her favorite Carly Simon songs."