Clara Law was born in Macau and raised in Hong Kong. She joined Radio Television Hong Kong (RTHK) in 1978 as an assistant producer, having graduated from the University of Hong Kong with a degree in English Literature. During her three years at RTHK, she directed twelve single episode dramas. From 1982 to 1985, she attended the National Film and Television school in Engliand where she completed her first feature-length film They Say the Moon is Fuller Here, which was awarded the Silver Plaque at the Chicago Film Festival (1985). She returned to Hong Kong in 1985 and, while directing fictions and docu-dramas for RTHK, she developed her first screenplay for feature production.

Her screenplay in 1988 for The Other Half and The Other Half, tackles the emotional vacuum confronted by married couples having to live apart due to emigration. Her screenplay in 1989 for The Reincarnation of Golden Lotus traces the fate of a Mainland Chinese ballet dancer going through China's Cultural Revolution and her final emigration to Hong Kong. Her film Autumn Moon, was winner of the Golden Leopard at the Locarno Festival (1992). Her film Farewell, China (1990) was winner of the Special Jury Award in the Torino Film Festival (1990), four Awards in the Golden Horse Film Festival (1990) and was selected for the Toronto, Chicago, and Munich Film Festivals (1990) and the Rotterdam Film Festival (1991). Her film Temptation of a Monk won the Grand Prix at the Creteil International Film Festival, 1994.