Born in Hong Kong on May 19, 1939, and growing up in Kowloon Tong, she is the daughter of Kwan Wing Hong, a Cantonese Architect, and Marquita Scott, a Caucasian model of English and Scottish ancestry. The son of a Chinese Lawyer, Kwan Wing Hong attended Cambridge University and became an eminent Architect in Hong Kong. After he met Marquita Scott in London, the two married and moved to Hong Kong. In that era, society held a dim view of miscegenation. Kwan has an older brother, Ka Keung.

In fear of the Japanese invasion of Hong Kong during World War II, Wing Hong, in the guise of a coolie, escaped from Hong Kong to North China in Christmas 1941 with his two children, whom he hid in wicker baskets. Kwan and her brother were transported by servants, evading Japanese sentries. They remained in exile in Western China for five years until the war ended, after which they returned to Hong Kong and lived in a spacious, contemporary home her father designed. Marquita Scott escaped to England and never rejoined the family. Kwan's parents divorced when she was two years old. Her mother later moved to New York and married an American. Remaining in Hong Kong with the children, her father married a Chinese woman, whom Kwan called "Mother". Her father and her step-mother raised her, in addition to her brother, five half-brothers and half-sisters. Five of Kwan's siblings became lawyers.

When The World of Suzie Wong began to tour, Kwan was assigned the part of a bargirl. In addition to her small supporting character role, Kwan became an understudy for the production's female lead, France Nuyen. Though Stark and the male lead william Holden preferred Kwan, despite her somewhat apprehensive demeanor during the screen test, she did not get the role. Paramount favored the eminent France Nuyen, who had been widely praised for her performance in the film South Pacific (1958). Stark acquiesced to Paramount's wishes. Nuyen received the role and Kwan later took the place of Nuyen on Broadway. In a September 1960 interview with Associated Press Journalist Bob Thomas, she said, "I was bitterly disappointed, and I almost quit and went home when I didn't get the picture." Kwan did not receive the lead role because Stark believed she was too inexperienced at the time. Nuyen won the title role in the upcoming movie because of her powerful portrayal of Suzie Wong during the tour. She moved to England to film the movie, leaving an opening for Kwan to ascend to the lead female role in the touring production. In 1959, one month after Nuyen was selected for the film role and while Kwan was touring in Toronto, Stark told her to screen test again for the film. Kwan responded to his phone call from London, asking, "How can I come? I'm in this show." To provide a pretext for Kwan's sudden hiatus from the touring production, Stark sent a cablegram to her superiors saying her father had become ill and had been hospitalized. Kwan later recalled in an interview about three years later, "So I went to the manager and told him a lie. It was not very nice, but what could I do?" After Kwan accepted the role, the Broadway play Producer sued her for leaving with little notice.

Kwan's success in her early career was not mirrored in later years, due to the cultural nature of 1960's America. Ann Lloyd and Graham Fuller wrote in their book The Illustrated Who's Who of the Cinema: "Her Eurasian beauty and impish sense of humor could not sustain her stardom". Her later films were marked by multifarious parts, comprising movie and television roles for American and European productions. Kwan discovered that she had to journey to Europe and Hong Kong to escape the ethnic typecasting in Hollywood that confined her largely to Asian roles in spite of her Eurasian appearance.

In 1961, Kwan offered to work as a Teacher for King's Own Yorkshire Light Infantry. The infantry was training for military involvement in Malaya (now part of Malaysia), and the regiment's commanders believed that the infantrymen should be taught the Chinese language and how to handle chopsticks. Captain Anthony Hare announced to the public that the infantry needed a Teacher – an attractive one. He later acknowledged that he appended the Teacher "must be attractive" so that more Soldiers would attend the sessions. Kwan, in Hollywood at the time, replied via cable: "Please consider me a candidate as Chinese Teacher for Yorkshire Light Infantry. I am fluent in Chinese, fabulous with chopsticks, and fond of uniforms." Captain Hare commented, "Miss Kwan is too beautiful. I think she would be too much of a distraction." Her tardy request was not evaluated, as the infantry had already accepted the application of another Chinese woman.

Her third movie was the British drama film The Main Attraction (1962) with Pat Boone. She played an Italian circus performer who was the love interest of Boone's character. While she was filming the movie in the Austrian Alps, she met Peter Pock, a hotelier and ski Teacher, with whom she immediately fell in love. She reflected, "The first time I saw that marvelous-looking man I said, 'That's for me.'" After several weeks, the two married and resided in Innsbruck, Tyrol, Austria. Kwan later gave birth to Bernhard "Bernie" Pock. In December 1963, Pock was constructing a luxury hotel in the Tyrolean Alps. During Christmas of that year, Nancy Kwan visited the location and was able to participate in several pre-1964 Winter Olympics events despite having been very occupied with movies. Her contract with film production company Seven Arts led her to travel around the world to film movies. She found the separation from her son, Bernie, who was not yet a year old, difficult. She said, "He's coming into a time when he's beginning to assert his personality." Fair-skinned and blue-eyed, Bernie had his father's appearance.

In 1963, Kwan starred as the title character of Tamahine. Because of her role, she went to the optician to get contact lenses so should would look blue-eyed. Playing an English-Tahitian ward of the head master at an old English public school, she was praised by the Boston Globe for her "charming depict[ion]" of the character.

In Fate Is the Hunter (1964), her seventh film, Kwan played an ichnologist. It was her first role as a Eurasian character. Kwan's roles were predominantly comic characters, which she said were more difficult roles than "straight dramatic work" owing to the necessity of more vigor and precise timing.

Kwan met Bruce Lee when he choreographed the martial arts moves in the film The Wrecking Crew (1969). In Kwan's role in the film, she fought the character played by Sharon Tate by throwing a flying kick. Her martial arts move was based not on karate training, but on her dance foundation. Author Darrell Y. Hamamoto noted that this "ironically" twisted Kwan's "dragon-lady role" through its underscoring the replacement of Kung Fu with Western dance moves. She became close friends with Lee and met his wife and two children. In the 1970s, both Kwan and Lee returned to Hong Kong, where they carried on their companionship.

Nancy Kwan married David Giler (a Hollywood scriptwriter) in July 1970 in a civil ceremony in Carson City, Nevada. The marriage was Kwan's second and Giler's first.

That year, Kwan returned to Hong Kong with her son because her father was sick. She initially intended to remain for one year to assist him, but ultimately remained for about seven years. She did not stop her work, starring as Dr. Sue in the film Wonder Women (1973). While in Hong Kong, Kwan founded a production company, Nancy Kwan Films, which made ads mostly for people in Southeast Asia. In the 1980s, she returned to the United States, where she played characters in the television series Fantasy Island, Knots Landing and Trapper John, M.D..

She serves as a spokeswoman for the Asian American Voters Coalition, a Pan-Asian political group established in 1986 to aid Asian actors.

In 1987, Nancy Kwan co-owned the dim sum restaurant Joss. Kwan, Producer Ray Stark, and restaurateur and Hong Kong film Director Cecile Tang financed the restaurant, located on Sunset Strip in West Hollywood.

She has appeared on television commercials even into the 1990s and appeared in "late night infomercials" as the spokesperson for the cosmetic "Oriental Pearl Cream".

In November 1993, Kwan co-starred in the two-character play Arthur and Leila about two siblings who struggle with their Chinese identities. It debuted in the Bay Front Theater in Fort Mason, San Francisco, and moved to Los Angeles two weeks later. Variety reviewer Julio Martinez praised Kwan for her ability to "flo[w] easily between haughty sophistication and girlish insecurity".

Around 1994, her husband and she produced the feature film Biker Poet. Bernie was the Director and an actor in the film.

Kwan sporadically records audiobooks. In 1995, Kwan recorded an audiobook for Anchee Min's memoir Red Azalea in what Publishers Weekly called a "coolly understated performance that allows the story's subtleties and unexpected turns to work by themselves". In 2011, she recorded an audiobook for the 1989 memoir When Heaven and Earth Changed Places by Le Ly Hayslip with Jay Wurts. San Francisco Chronicle's Patricia Holt praised Kwan's intonation in her delivery, writing that "Kwan's faint Asian accent and careful pronunciation of Vietnamese words make Hayslip's weaving of her past and present lives a riveting experience".

In 1996 when he was 33, Kwan's son, Bernie, died after contracting AIDS from his girlfriend whom Kwan had cautioned him to avoid. Four years after his death, poet and Actress Amber Tamblyn compiled her debut poetry book Of the Dawn and dedicated it to Pock. Calling him like a "big brother", she noted that she acted in the film Biker Poet with him when she was nine. Tamblyn said he was the "first guy" to convince her to share her poems.

Kwan has been involved in philanthropy for AIDS awareness. In 1997, she published A Celebration of Life – Memories of My Son, a book about her son who died after being infected by HIV. She gave profits from both the book and a movie she created about him to supporting the study of AIDS and the promotion of AIDS awareness.

Owing to Kwan's lack of acting experience, at Stark's request, she traveled to the United States, where she attended acting school in Hollywood and resided in the Hollywood Studio Club, a chaperoned dormitory, with other junior actresses. She later moved to New York. Kwan signed a seven-year contract with Stark's Seven Arts Productions at a beginning salary of $300 a week though she was not given a distinct role. In 2005, Edward S. Feldman and Tom Barton characterized Kwan's wages and her employment as "indentured servitude". In a retrospective interview, Kwan told Goldsea that she had no prior acting experience and that the $300 a week salary was "a lot of money to me then".

On March 17, 2006, cheongsam-wearing Kwan and her husband, Norbert Meisel, attended the debut performance of Hong Kong Ballet's depiction of Suzie Wong at Sha Tin Town Hall. Kwan told The Kansas City Star in 2007 that she did not consider retiring, leads to trouble. Retirees, she professed, frequently find themselves with nothing to do because they have not readied themselves for it. Kwan said, "I hope I'm working until the day I die. If work is a pleasure, why not?" In 2006, Kwan reunited with Flower Drum Song co-star James Shigeta to perform A. R. Gurney's two-person play Love Letters. They performed the play at Los Angeles' East West Players and San Francisco's Herbst Theatre.

Kwan and her husband Norbert Meisel write and direct films about Asian-Americans. Kwan believes that Asians are not cast in enough films and TV shows. Meisel and she resolved to create their own scripts and films about Asian characters. In 2007, they wrote, directed, and produced Star of Sunshine, a Bildungsroman film starring Boys Don't Cry Actress Cheyenne Rushing, who plays Rachel. An ardent Pianist in an afflicted household, Rachel journeys to find her restless father, a musician who deserted her when she was a mere child. In Sunshine, Rachel is supported by Kwan, the manager of a jazz club, who knows a mystery about her. In the film's final scene, Kwan dances, an activity she has enjoyed since her youth.

Kwan wrote an introduction for the 2008 book For Goodness Sake: A Novel of Afterlife of Suzie Wong written by American author James Clapp using the nom de plume Sebastian Gerard. Clapp became acquainted with Kwan through Director Brian Jamieson, who was filming a documentary about Kwan's life.

In her performing arts career, Kwan appeared in two television series and over 50 films. The Straits Times reported in March 2011 that Kwan continues to serve as a film Screenwriter and executive.

The World of Suzie Wong was a "box-office sensation". Critics lavished praise on Kwan for her performance. She was given the nickname "Chinese Bardot" for her unforgettable dance performance. Kwan and two other actresses, Ina Balin and Hayley Mills, were awarded the Golden Globe for the "Most Promising Newcomer–Female" in 1960. The following year, she was voted a "Star of Tomorrow". Scholar Jennifer Leah Chan of New York University wrote that Suzie provided an Asian actress—Kwan—with the most significant Hollywood role since Actress Anna May Wong's success in the 1920s. Designed by London hairdresser Vidal Sassoon, Kwan's bob cut in the film drew widespread media attention for the "severe geometry of her new hairstyle". Sassoon's signature cut of Kwan's hair was nicknamed "the Kwan cut", "the Kwan bob", or was plainly known as "the Kwan"; photographs of Kwan's new hairstyle appeared in both the American and British editions of Vogue.

The scene of Kwan, reposed on a davenport and adorned in a dazzling cheongsam, while showing a "deliciously decadent flash of thigh", became an iconic image. Clad in a cheongsam—"a Chinese dress with a high collar and slits, one on each side of the skirt"—Kwan was on the October 1960 cover of Life, cementing her status as an eminent sex symbol in the 1960s. Nicknamed the "Suzie Wong dress", the cheongsam in the portrait spawned thousands of copycat promotional projects. In a 1962 interview, Kwan said she "loved" the cheongsam, calling it a "national costume". She explained that it "has slits because Chinese girls have pretty legs" and "the slits show their legs".