Westwood was born in the village of Tintwistle, Cheshire, on 8 April 1941, the daughter of Gordon Swire and Dora Swire (née Ball), who had married two years previously, two weeks after the outbreak of World War II. At the time of Vivienne's birth, her father was employed as a storekeeper in an aircraft factory; he had previously worked as a greengrocer.

She attended Glossop Grammar School. In 1958, her family moved to Harrow, London. She studied silver-smithing at Harrow School of Art, but left after one term, saying later, "I didn't know how a working-class girl like me could possibly make a living in the art world". After taking up a job in a factory and studying at a teacher-training college, she became a primary school Teacher. During this period, she created her own jewellery, which she sold at a stall on Portobello Road. While she continued teaching and simultaneously making jewelry, this led to her discovering design when she met Malcolm McLaren who became a major inspiration to her designs in Punk Fashion.

In 1962, she met Derek Westwood, a Hoover factory apprentice, in Harrow. They married on 21 July 1962; Westwood made her own wedding dress. In 1963, she gave birth to a son, Benjamin (Ben) Westwood.

Once she met Malcolm McLaren, it meant the end of Westwood's marriage to Derek. Westwood and McLaren moved to a council flat in Clapham, and while living there, they had a son together in 1967, Joseph Corré.. Westwood continued to teach until 1971; she created clothes which McLaren conceived. McLaren became manager of the punk band, the Sex Pistols, and subsequently the two garnered attention as the band wore Westwood's and McLaren's designs.

Westwood was one of the Architects of the punk fashion phenomenon of the 1970s, saying "I was messianic about punk, seeing if one could put a spoke in the system in some way". The "punk style" included BDSM fashion, bondage gear, safety pins, bicycle or toilet chains on clothing and spiked dog collars/chokers for jewellery, as well as outrageous make-up and hair. Essential design elements include the adoption of traditional elements of Scottish design such as tartan fabric.

She dubbed the period 1981-85 "New Romantic" and 1988–91 as "The Pagan Years" during which "Vivienne's heroes changed from punks and ragamuffins to 'Tatler' girls wearing clothes that parodied the upper class". From 1985-87, Westwood took inspiration from the ballet Petrushka to design the mini-crini, an abbreviated version of the Victorian crinoline.

In April 1989 Westwood appeared on the cover of Tatler dressed as then-Prime Minister Margaret Thatcher. The suit that Westwood wore had been ordered for Thatcher but had not yet been delivered. The cover, which bore the caption "This woman was once a punk", was included in The Guardian's list of the best ever UK magazine covers.

In 1992, Westwood was awarded an OBE, which she collected from Queen Elizabeth II at Buckingham Palace. At the ceremony, Westwood was knicker-less, which was later captured by a Photographer in the courtyard of Buckingham Palace. Westwood later said, "I wished to show off my outfit by twirling the skirt. It did not occur to me that, as the Photographers were practically on their knees, the result would be more glamorous than I expected," and added: "I have heard that the picture amused the Queen." Westwood advanced from OBE to DBE in the 2006 New Year's Honours List "for services to fashion", and has twice earned the award for British Designer of the Year.

Westwood is married to her former fashion student, Austrian Andreas Kronthaler. For 30 years she lived in an ex-council flat in Nightingale Lane, Clapham, until, in 2000, Kronthaler convinced her to move into a Queen Anne style house built in 1703, which once belonged to the mother of Captain Cook. She is a keen gardener.

In 2002, Westwood designed the theatrical costumes of the Opera Giuseppe Verdi's Rigoletto. Produced by "Arturo Toscanini Foundation", David Guido Pietroni and Maurizio De Santis, the Opera was represented in Piazza del Campo in Siena, Italy. From the live shooting of the show he produced the DVD entitled Rigoletto Story.

In 2006, she collaborated with Nine West, whose shoes are not designed directly by Westwood; the Nine West brand name shares its label with Westwood. Westwood's Gold Label and MAN hats are created by Prudence Millinery. From 12 November 2004 – 30 January 2005, she was featured in a retrospective show "Vivienne Westwood - 34 years in fashion" at the National Gallery of Australia in Canberra. The exhibition, created from approximately 145 complete outfits grouped into the themes from the early 1970s to the present day, was drawn from her own personal archive and the V&A's extensive collection. The designs ranged from early punk garments to glamorous "historical" evening gowns.

In September 2005, Westwood joined forces with the British civil rights group Liberty and launched exclusive limited design T-shirts and baby wear bearing the slogan I AM NOT A TERRORIST, please don't arrest me. She said she was supporting the campaign and defending habeas corpus. "When I was a schoolgirl, my history Teacher, Mr. Scott, began to take classes in civic affairs. The first thing he explained to us was the fundamental rule of law embodied in habeas corpus. He spoke with pride of civilisation and democracy. The hatred of arbitrary arrest by the lettres de cachet of the French monarchy caused the storming of the Bastille. We can only take democracy for granted if we insist on our liberty", she said. The sale of the £50 T-shirts raised funds for the organisation.

Against the claim that anti-consumerism and fashion contradict each other, she said in 2007: "I don't feel comfortable defending my clothes. But if you've got the money to afford them, then buy something from me. Just don't buy too much." She faces criticism from eco-activists who claim that despite her calls to save the environment she herself makes no concessions to making her clothing or her Business eco-friendly.

On Easter Sunday 2008, she campaigned in person at the biggest Campaign for Nuclear Disarmament demonstration in ten years, at the Atomic Weapons Establishment, Aldermaston, Berkshire.

Camilla, Duchess of Cornwall, wore Westwood to Royal Ascot in 2009.

In January 2011, Westwood was featured in a Canadian-made television documentary called Vivienne Westwood's London in which she takes the viewer through her favourite parts of London, including the Courtauld Institute of Art, the Wallace Collection, Whitechapel (accompanied by Sarah Stockbridge), Hampton Court, the London Symphony Orchestra, Brixton Market and Electric Avenue, and the National Gallery.

In 2012, Westwood was among the British cultural icons selected by Artist Sir Peter Blake to appear in a new version of his most famous artwork – the Beatles' Sgt. Pepper's Lonely Hearts Club Band album cover – to celebrate the British cultural figures of his life that he most admires. Also in 2012, Westwood was chosen as one of The New Elizabethans to mark the Diamond Jubilee of Queen Elizabeth II. A panel of seven academics, journalists and historians named Westwood among a group of 60 people in the UK "whose actions during the reign of Elizabeth II have had a significant impact on lives in these islands and given the age its character".

In 2013, sustainable luxury fashion publication Eluxe Magazine accused Westwood of using the green movement as a marketing tool on the basis that certain Westwood fashion and accessories lines are made in China. These were found to include PVC, polyester, rayon and viscose, all derived from harmful chemicals. Eluxe also pointed out that, in spite of Westwood's statements that consumers should 'buy less', her company produces nine collections a year (compared to the average designer's two) Vivienne Westwood was also accused of using unpaid interns in her fashions house and making them work over 40 Hours per week, some interns have complained about how they had been treated by the fashion house.

In October 2014, the authorised biography Vivienne Westwood by Ian Kelly was published by Picador. Paul Gorman described it as "sloppy" and "riddled with inaccuracies" on the basis of multiple errors in the book including misspelling the names of popular rock stars “Jimmy” Hendrix and Pete “Townsend” and misidentifying the date of the Sex Pistols’ first concert and McLaren’s age when he died in 2010.

In February 2015, Westwood was announced as the special guest on the Greens' We Are The Revolution campaigning tour of English universities in such cities as Liverpool, Norwich, Brighton and Sheffield.

One of Westwood’s first immersion into the fashion world began during the punk era, where she dabbled in both men’s and women’s design, specifically in uniforms which combined her forties dressmaking with touches of Savile Row. She closely worked with Richard Branson on this collection. These pieces were more functional designs of Westwood, as they were primarily for work but still contained her flair as a designer. Clothes for the female crew included a red suit, accentuating the women’s curves and hips, and strategically places darts around the busts. Contrary to the men’s grey and burgundy three-piece suit with various details in lapels and pockets. These two designers also focused on impacting the environment, as they were both passionate about using sustainable materials throughout their designs. As they worked with Virgin Atlantic on the functional crew designs, each look featured Closed Loop Recycling and maximum sustainability in recycled polyester. Before fully launching the designs, Westwood and Branson released some for a trial period with the pilot and cabin crew to allow for design changes to be made accordingly. This project was important to these two designers because this project shared the spirit of adventure that these two employed, as this challenged them to create something even more memorable.