Clarissa Kaye was born as Clarissa Knipe in Sydney in 1931. In 1958 she became one of a class of informal students of Hayes Gordon, who taught "The Method" (the group included Reg Livermore and Jon Ewing). Their first public performances were a series of one-act plays by Tennessee Williams. The group later became the Ensemble Theatre, Sydney's first theatre in the round and its longest established professional theatre company.

Her first film role was as Meg in Age of Consent (1969), in which she appeared in scenes with James Mason, including a sex scene that was censored from Columbia Pictures' UK and US releases.

Mason and Kaye were married on 8 August 1971 in Corseaux-sur-Vevey, Switzerland, and remained together until his death in 1984. (It has been reported that it was her second marriage.) Kaye reportedly was willing to put her career on hold, but Mason regularly insisted that she be given roles in his films. They shared scenes in Frankenstein: The True Story (1973); they also both appeared in Salem's Lot (1979), but did not share any scenes.

They appeared on Broadway in April 1979 in Brian Friel's play Faith Healer, but were never on stage together (the play is constructed as four monologues by three characters). Her involvement in Faith Healer was also largely at Mason's request but she struggled with both the role and José Quintero's direction. Ed Flanders eventually left the play, refusing to work with Kaye, and the production ended after only 17 days.

James Mason died in 1984, and Clarissa Kaye died on 21 July 1994 from cancer. Before Mason remarried, his children Portland and Morgan (both from his first marriage to Pamela Mason) were to be the beneficiaries of his large estate, valued at £15 million. Mason changed his will to leave Clarissa Kaye as the sole beneficiary, but the children understood that they would still ultimately receive the proceeds after their stepmother's death. However, she was on such bad terms with them that she left her estate to an unidentified trust rumoured to be on behalf of the Sathya Sai Organization, run by devotees of the Indian guru Sathya Sai Baba. The organization, based in an ashram near Bangalore, neither confirmed nor denied this.