Fabray was born Ruby Bernadette Nanette Theresa Fabares on October 27, 1920, in San Diego, to Lily Agnes (McGovern), a housewife, and Raoul Bernard Fabares, a train Conductor. She took to being known by Nanette as her first name for a beloved aunt. The family resided in Los Angeles, and Fabray's mother was instrumental in getting her daughter involved in show Business as a child. At a young age, she studied tap dance with, among others, Bill "Bojangles" Robinson. She made her professional stage debut as "Miss New Years Eve 1923" at the Million Dollar Theater at the age of three. She spent much of her childhood appearing in vaudeville productions as a Dancer and singer. She appeared with stars such as Ben Turpin. Raised by a what would modernly be known as a stage mom, Fabray herself was not much interested in show Business until later on, and never believed in pushing children into performing at a young age, instead wishing for them to be able to live out their childhoods as opposed to having to deal with adult concerns at a young age. Her early dance training, however, did lead her to always consider herself a tap Dancer first and foremost.

At the age of 19, Fabray made her feature film debut as one of Bette Davis's ladies-in-waiting in The Private Lives of Elizabeth and Essex (1939). She appeared in two additional motion pictures that year for Warner Bros., The Monroe Doctrine (short) and A Child Is Born but was not signed to a long-term studio contract. She next appeared in the stage production Meet the People in Los Angeles in 1940, which then toured the United States in 1940–1941. In the show, she sang the opera aria "Caro nome" from Giuseppe Verdi's Rigoletto while tap dancing. During the show's New York run, Fabray was invited to perform the "Caro nome" number for a benefit at Madison Square Garden with Eleanor Roosevelt as the main speaker. Ed Sullivan was the master of ceremonies for the event and the famed host, reading a cue card, mispronounced her name as "Nanette Fa-bare-ass." After this embarrassing faux pas, the Actress immediately legally changed the spelling of her name from Fabares to as close as possible match the proper pronunciation: Fabray.

In the mid-1940s, Fabray worked regularly for NBC on a variety of programs in the Los Angeles area. In the late 1940s and early 1950s, she made her first high-profile national television appearances performing on a number of variety programs such as The Ed Sullivan Show, Texaco Star Theatre, and The Arthur Murray Party.

Artur Rodziński, Conductor of the New York Philharmonic, saw Fabray's performance in Meet the People and offered to sponsor operatic vocal training for her at the Juilliard School. She studied opera at Juilliard with Lucia Dunham during the latter half of 1941 while performing in her first Broadway musical, Cole Porter's Let's Face It!, with Danny Kaye and Eve Arden. She decided that studying during the day and performing at night was too much for her and took away from her active social nightlife which she so enjoyed, and that she preferred performing in musical theatre over opera and thus withdrew from the school after approximately five months. She became a successful musical theatre Actress in New York during the 1940s and early 1950s, starring in such productions as By Jupiter (1942), My Dear Public (1943), Jackpot (1944), Bloomer Girl (1946), High Button Shoes (1947), Arms and the Girl (1950), and Make a Wish (1951). In 1949, she won the Tony Award for Best Actress in a Musical for her portrayal of Susan Cooper in the Kurt Weill/Alan Jay Lerner musical Love Life. She received a Tony nomination for her role as Nell Henderson in 1963 for Mr. President 1963 after an eleven-year absence from the New York stage. Fabray continued to tour in musicals for many years, appearing in such shows as Wonderful Town and No, No, Nanette.

In 1953, Fabray played her best-known screen role as a Betty Comden-like Playwright in the Metro-Goldwyn-Mayer musical The Band Wagon with Fred Astaire and Jack Buchanan. The film in one scene featured Fabray, Astaire, and Buchanan performing the classic comedic musical number "Triplets", which was also included in That's Entertainment, Part II. Fabray's additional film credits include: The Happy Ending (1969), Harper Valley PTA (1978), and Amy (1981).

She also appeared on Your Show of Shows as a guest star opposite Sid Caesar. She appeared as a regular on Caesar's Hour from 1954 to 1956, winning three Emmys. Fabray left the show after a misunderstanding when her Business manager, unbeknownst to her, made unreasonable demands for her third season contract. Fabray and Caesar did not reconcile until years later.

She was hospitalized for almost two weeks after being knocked unconscious by a falling pipe backstage during a live broadcast of Caesar's Hour in 1955. The audience in the studio heard her screams and Sid Caesar had at first been told she had been killed in the freak accident. Fabray suffered a serious concussion along with associated temporary vision impairment and photosensitivity/photophobia. Later she realized she had only evaded being directly impaled because of the position she happened to have been in at the time (bending over as opposed to standing up straight). In 1978, during the filming of the movie Harper Valley PTA, Fabray suffered a second major concussion when she was knocked over, hitting her neck on the sidewalk and the back of her head on a rock. The accident was caused when a live elephant appearing in the film was spooked by a drunken civilian bystander who had bypassed the blocked-off street on the set and stampeded. Fabray suffered associated memory loss and visual issues like nystagmus, but still had to finish her scenes (namely a car chase) in the movie, for which filming had not yet wrapped. She had to be closely directed and coached, fed line-by-line, as she could not remember any of her lines or cues due to the concussion. She also had to be filmed only from specific angles to mask the obvious abnormal eye movements the concussion had temporarily caused.

In 1961, Fabray starred in 26 episodes of Westinghouse Playhouse, a half-hour sitcom series that also was known as The Nanette Fabray Show or Yes, Yes Nanette. The character was mainly loosely based off herself and her own life as a newly married couple with her husband and her new stepchildren.

Fabray's first husband, David Tebet, was in television marketing and talent and later became a vice President of NBC. According to Fabray, their marriage ended in divorce partially because of her depression, anxiety, and insecurities surrounding her worsening hearing loss. Her second husband was Screenwriter Ranald MacDougall, whose writing credits include Mildred Pierce and Cleopatra and who, in the early 1970s, served as President of the Writers Guild of America. The couple was married from 1957 until his death in 1973. They had one son together: Jamie MacDougall. She was a resident of Pacific Palisades, California; and was the aunt of singer/actress Shelley Fabares. Her niece's 1984 wedding to M*A*S*H actor Mike Farrell was held at her home. Longtime neighbors, Fabray was associated with Ronald Reagan's campaign for the governorship of California in 1966.

A Tony and three-time [Primetime] Emmy award winner, Nanette Fabray has a star on the Hollywood Walk of Fame. In 1986, she received a Life Achievement award from the Screen Actors Guild.

Fabray's most recent work was in 2007, when she appeared in The Damsel Dialogues, an original revue by Composer Dick DeBenedictis, with direction/choreography by Miriam Nelson. The show, which was performed at the Whitefire Theatre in Sherman Oaks, California, focused on women's issues with life, love, loss, and the workplace.

Nanette Fabray died on February 22, 2018 at the Canterbury Nursing home in California at the age of 97.

She won a Golden Apple award from the Hollywood Women’s Press Club in 1960 along with Janet Leigh for being a Most Cooperative Actress.