Lana was born Laurence Wachowski in Chicago in 1965; Lilly was born Andrew Paul Wachowski two and a half years later, in 1967. Their mother Lynne (née Luckinbill) was a nurse and Painter. Their father Ron Wachowski was a businessman of Polish descent. Their uncle is the actor and Primetime Emmy Award-winning Producer Laurence Luckinbill. They have two additional sisters: Julie and Laura. Julie was credited as assistant coordinator in the Wachowskis' film Bound; she is a Novelist and Screenwriter.

J. Michael Straczynski, who has worked with the Wachowskis on Ninja Assassin and Sense8, has said that the sisters told him they were reading his column on scriptwriting for the Writer's Digest magazine, for inspiration and pointers. Straczynski contributed to the magazine from 1981 to 1991.

Lana and Lilly attended the Catholic Kellogg Elementary School in Chicago's Beverly area, and they graduated from Whitney Young High School, known for its performing arts and science curriculum, in 1983 and 1985 respectively, in both cases under their birth names. Former classmates recall their playing Dungeons & Dragons and working in the school's theater and TV program.

In the mid-1990s they branched out into film writing, including the script for Assassins in 1994, which was directed by Richard Donner and released in 1995. Warner Bros. bought the script and included two more pictures in the contract. Donner had their script "totally rewritten" by Brian Helgeland and the Wachowskis tried unsuccessfully to remove their names from the film. They say the experience gave them the perspective that they should become Directors or "[they will] never survive as Writers in this town."

Lilly has been married to Alisa Blasingame since 1991. Lana married Thea Bloom in 1993; they divorced in 2002. Lana subsequently began dating Karin Winslow; they married in 2009. Winslow is a board member of the Chicago House and Social Service Agency.

Prior to working in the film industry, the Wachowskis wrote comic books for Marvel Comics' Razorline imprint, namely Ectokid (created by horror Novelist Clive Barker) in 1993 as well as writing for Epic Comics' Clive Barker's Hellraiser and Clive Barker's Nightbreed comic series.

Their next project was the 1996 neo-noir thriller Bound, for which they wrote the script and made their debut as Directors. The film was well received for its style and craft, and was noted as one of the first mainstream films to feature a gay relationship without it being central to the plot. Taking advantage of the positive buzz, the Wachowskis asked to direct their next picture, The Matrix.

In 1998, in the context of explaining how they got their start in filmmaking, the Wachowskis mentioned Roger Corman's book, How I Made A Hundred Movies in Hollywood and Never Lost a Dime, and indicated, with laughter, that they liked his movies, and began by wanting to "make a low-budget horror movie." In the same interview, they expressed being flattered, after their first film, by comparisons to the Coen brothers, who had "made five, maybe six great movies…" at that time.

On the video game front, they had been exchanging letters with Hideo Kojima and met him during a Famitsu interview in late 1999. Metal Gear Solid was the first video game they played after finishing work on The Matrix. Candidates for an adaptation of the first Matrix movie to video game form included Kojima, Bungie and Shiny Entertainment, whose Messiah PC game impressed them. Shiny's David Perry, who ultimately had his company develop and collaborate with them on the Enter the Matrix and The Matrix: Path of Neo video games, was impressed with their familiarity with the medium; this proved helpful during development. The Wachowskis owned both a PlayStation 2 and Xbox video game console and played several games such as Splinter Cell and Halo 2. They reportedly destroyed their Xbox during a Halo deathmatch. Actor Collin Chou recounts an instance of visiting their office and finding them playing video games on the floor. Lilly is a fan of the Death Jr. PlayStation Portable game.

Rumors that Lana Wachowski was transitioning spread in the early 2000s, though neither sibling spoke directly on the subject at the time. In 2003, Gothamist.com reported the possible gender reassignment. In a 2007 interview Joel Silver, the Producer of numerous Wachowski films, said that the rumors concerning the gender reassignment surgery were "all untrue", saying that "they just don't do interviews, so people make things up." Crew members working on Speed Racer said similarly.

Lana has most been influenced by 2001: A Space Odyssey, Blade Runner, Ma vie en rose, and My Neighbor Totoro. Both Wachowskis are fans of the Ghost in the Shell, Akira, Wicked City, Ninja Scroll and Fist of the North Star anime films.

In 2003, they created Burlyman Entertainment and released comic books based on The Matrix as well as two original bi-monthly series:

During The Matrix Reloaded, The Matrix Revolutions, The Animatrix and Enter the Matrix production, the Wachowskis created EON Entertainment (not to be confused with Eon Productions), their production company to coordinate and direct all involved partners. It is also where the films were edited together, after the various FX vendors sent their finished work. EON's internal VFX team, ESC, did a number of visual effect shots for the two Matrix sequels and coordinated the other vendors. ESC was shut down in summer 2004. Anarchos Productions (credited in Cloud Atlas as Anarchos Pictures) is their production company that has been billed for all their films starting with V for Vendetta up to the first season of Sense8. In the second season and following Lilly's break from the show, Anarchos is replaced by Venus Castina Productions, a production company created by Lana Wachowski and her wife, Karin Winslow. It is named after the epithet of the Roman goddess Venus, who in this form, was supposedly associated with "the yearnings of feminine souls locked up in male bodies."

The Art of the Matrix book credits them for including their screenplay and additional art. The Wachowskis also wrote an introduction to the 2005 published Vol. 2: Tag trade paperback of Ex Machina comic book, being big fans of it. Additionally Lana Wachowski wrote the introduction to the 2012 published No Straight Lines: Four Decades of Queer Comics collection of LGBTQ comic book stories.

Additionally classifying themselves as "lifelong rabid Bulls fans" they created a revamped introductory animation for Chicago Bulls to open the 2006–2007 regular season.

Lana completed the transition after Speed Racer's release in 2008, and by at least December 2010, trade magazines and newspapers referred to her as "Lana Wachowski", and to the duo as "Andy and Lana Wachowski." On some documents her name is shown as Laurenca Wachowski. In July 2012, Lana made her first public appearance after transitioning, in a video discussing the creative process behind Cloud Atlas. Lana is the first major Hollywood Director to come out as transgender.

In December 2009, Arianna Huffington tweeted pictures of herself on the set of "a Wachowskis movie on Iraq from the perspective of the Future." CHUD.com reported what the Wachowskis were doing was camera tests and shooting of test footage on the Red digital camera for a Future movie, but not shooting the movie itself. In March 2010, Jesse Ventura said he had also shot for the project right before Huffington. Both of them were dressed as people from roughly 100 years in the Future and they were asked to improvise without a script about the Iraq War. In May 2010, Deadline reported the movie was going to be a hard-R story that would begin in the Future but move back to the then-current war in Iraq and center on the homosexual relationship between an American soldier and an Iraqi. The Wachowskis completed the script and were searching for funding to direct it. In July 2010, the movie was reported to have begun casting under the codename CN9 (or CN-9), and in August 2010 the full name was revealed as Cobalt Neural 9. In September 2010, Vulture posted additional details about the script and revealed the movie would be told in found footage-style from the perspective of digital archaeologists from the Future. An estimated $20 million budget was reported although they were told a studio would "never, ever" Finance it but perhaps the Wachowskis could do it themselves. In December 2010, The Hollywood Reporter wrote that Salman Rushdie and Cornel West had also shot talking head sequences along with the previously reported involvement of Huffington and Ventura but the Wachowskis were currently looking into other movies because of troubles financing it. Later, in September 2012, Aleksandar Hemon wrote about the making of Cloud Atlas and recalled he too was one of the people the Wachowskis had invited to interview in December 2009, to help inspire the script of Cobalt Neural 9. The last update on the film was in October 2012, when the Wachowskis were asked about it and they responded they were still keen to make it, because they had invested both financially ($5 million) and emotionally into it, even if that ends up being in a different form than film.

In December 2010, The Hollywood Reporter wrote that the Wachowskis were planning to direct for Warner Bros. a script of theirs called Hood, which was a modern adaptation of the Robin Hood legend. The Wachowskis were said to be reaching out to actors, including Will Smith.

In October 2012, Lana Wachowski received the Human Rights Campaign's Visibility Award. In her acceptance speech, she revealed that once during her youth, she had considered committing suicide because of her feelings of confusion about identity. Her acceptance speech was one of the longest public appearances by either of the notoriously reclusive siblings. Lana said that, although she and her sibling had not publicly commented on her transitioning during the previous decade, it was not because she was ashamed of it, nor had she kept it a secret from her family and friends. Rather, she stated, the two are generally shy about the news media and prefer to maintain their privacy. Comparing media exposure to losing one's virginity as an irreversible event that only happens once, the Wachowskis had tried to stay out of the public eye. They feared losing their privacy and the ability to go to public places without being noticed and harassed as celebrities.

In February 2014, Lana received the Freedom Award from Equality Illinois at their annual gala in Chicago.

The Wachowskis subsequently produced and directed Jupiter Ascending, an original space opera screenplay they wrote. The film was released in 2015. It stars Channing Tatum and Mila Kunis, and features the Wachowskis' regular collaborators John Gaeta on visual effects and Kym Barrett on costumes. According to Deadline, the financial and critical failure of Jupiter Ascending caused their Business relationship with Warner Bros. that began with The Matrix franchise to be terminated.

In March 2016, Lilly Wachowski also came out as a transgender woman, issuing a statement to the Windy City Times after a visit from a reporter from the Daily Mail newspaper. While on the red carpet of the 27th GLAAD Media Awards, Lilly commented she had been hiding she was transgender throughout her "whole life."