Ondaatje went to England in 1954, where he was educated at Dulwich College. He emigrated to Canada when he was 19, continuing his studies at the University of Toronto and Queen's University, Kingston, Ontario. His first collection of poems, Dainty Monsters 1967, was published shortly after his graduation. The poems, which juxtapose everyday life with mythology, attracted critical notice and gave a taste of Ondaatje's future style and methods.

After a second book of poetry, The Man with Seven Toes 1969, Ondaatje caught the attention of a wider public with his novel The Collected Works of Billy the Kid 1970. A meditation on the nature of heroism and violence, The Collected Works of Billy the Kid disrupts the conventions of the novel form to bring together poems, prose, images, newspaper interviews and other material to present "the artist as outlaw". The novel won the 1970 Governor General's Award. Ondaatje went on to win this award a second time in 1979, with his poetry collection There's a Trick With a Knife I'm Learning to Do.

In 1976, Ondaatje published Coming Through the Slaughter 1976, a novel about the madness and death of Buddy Bolden, the legendary New Orleans jazz musician, which again combines fact and fiction in a compelling mixture. Another novel, In the Skin of a Lion 1987, set in pre-war Toronto, is considered by many critics to be Ondaatje's finest novel, together with his celebrated The English Patient 1992. The latter, which was a co-winner of the Booker Prize in 1992, shares 2 of the former's characters and succeeds brilliantly in describing their inner lives. It was filmed in 1996.