One of three sons, Findley was born in Toronto, Ontario, to Allan Gilmour Findley, a stockbroker, and his wife, the former Margaret Maude Bull. His paternal grandfather was President of Massey-Harris, the farm-machinery company. He was raised in the upper class Rosedale district of the city, attending boarding school at St. Andrew's College (although leaving during grade 10 for health reasons). He pursued a career in the arts, studying dance and acting, and had significant success as an actor before turning to writing. He was part of the original Stratford Festival company in the 1950s, acting alongside Alec Guinness, and appeared in the first production of Thornton Wilder's The Matchmaker at the Edinburgh Festival. He also played Peter Pupkin in Sunshine Sketches, the CBC Television adaptation of Stephen Leacock's Sunshine Sketches of a Little Town.

Though Findley had declared his homosexuality as a teenager, he married actress/photographer Janet Reid in 1959, but the union lasted only three months and was dissolved by divorce or annulment two years later. Eventually he became the domestic partner of Writer Bill Whitehead, whom he met in 1962. Findley and Whitehead also collaborated on several documentary projects in the 1970s, including the television miniseries The National Dream and Dieppe 1942.

Through Wilder, Findley became a close friend of Actress Ruth Gordon, whose work as a Screenwriter and Playwright inspired Findley to consider writing as well. After Findley published his first short story in the Tamarack Review, Gordon encouraged him to pursue writing more actively, and he eventually left acting in the 1960s.

Findley's first two novels, The Last of the Crazy People (1967) and The Butterfly Plague (1969), were originally published in Britain and the United States after having been rejected by Canadian publishers. Findley's third novel, The Wars, was published to great acclaim in 1977 and went on to win the Governor General's Award for English-language fiction. It was adapted for film in 1981.

He publicly mentioned his homosexuality, passingly and perhaps for the first time, on a broadcast of the programme The Shulman File in the 1970s, taking flabbergasted host Morton Shulman completely by surprise.

Timothy Findley received a Governor General's Award, the Canadian Authors Association Award, an ACTRA Award, the Order of Ontario, the Ontario Trillium Award, and in 1985 he was appointed an Officer of the Order of Canada. He was a founding member and chair of the Writers' Union of Canada, and a President of the Canadian chapter of PEN International.

Findley was also the author of several dramas for television and stage. Elizabeth Rex, his most successful play, premiered at the Stratford Festival of Canada to rave reviews and won a Governor General's award. His 1993 play The Stillborn Lover was adapted by Shaftesbury Films into the television film External Affairs, which aired on CBC Television in 1999. Shadows, first performed in 2001, was his last completed work. Findley was also an active mentor to a number of young Canadian Writers, including Marnie Woodrow and Elizabeth Ruth.

Findley and Whitehead resided at Stone Orchard, a farm near Cannington, Ontario, and in the south of France. In 1996, Findley was honoured by the French government, who declared him a Chevalier de l'Ordre des arts et des lettres.

Findley died on June 21, 2002, in Brignoles, France, not far from his house in Cotignac.

His writing was typical of the Southern Ontario Gothic style — Findley, in fact, first invented its name — and was heavily influenced by Jungian psychology. Mental illness, gender and sexuality were frequent recurring themes in his work. Many of his novels centred on a protagonist who was struggling to find the moral and ethical and rational course of action in a situation that had spun wildly out of control. His characters often carried dark personal secrets, and were often conflicted — sometimes to the point of Psychosis — by these burdens.