Beverley Farmer was born in Windsor, Melbourne and educated at Carnegie State School, Gardiner Central School and MacRobertson Girls' High School. She graduated with a Bachelor of Arts degree at the University of Melbourne in 1960. In her Diploma of Education (Dip.Ed.) year, having broken her Education Department bond and been given a diagnosis of mental illness, shehitchhiked inland before renting a room in Melbourne and looking for work as a waitress. That year she also met Greek migrant Christos Talihmanidis, whom she married in 1965. From 1964 to 1969 she worked in various suburban high schools as a temporary teacher of French and English. In 1968 her first two stories were published.
The couple moved to Greece in 1969 to live with his parents. Their civil marriage was not recognised, and as a resident alien Farmer was not allowed to work; most of her first book, Alone, was written in those years. In 1972 they returned to Australia for their son to be born, and moved to Lorne, where they ran a seafood cafe. On a visit to the village in 1974 they had an Orthodox wedding and baptised their son, but in 1976, after another Greek summer together, they separated and were later divorced. Farmer taught briefly, then worked as a waitress and started writing again.
In 1980 Alone was published. In 1983 she brought out her first collection of stories, Milk, written on a Literature Board New Writer's Grant, and largely based on her experience of Greece. Later that year she went back alone to the village. In 1991 she went to Scandinavia to gather material for The Seal Woman, and to Greece to see the family. In 1996 she spent three months in Århus, Denmark, and made another flying visit to Greece. In 2005 she again visited her ex-mother-in-law, then 92 years old, in Greece.
Farmer has been Writer-in Residence at the University of Tasmania, Geelong College, Deakin University, the Women's College of the University of Queensland, Flinders University and the University of Århus, Denmark, was a Hawthornden Fellow in Scotland in 2001, and has read at festivals and conferences in the UK, Denmark, New Zealand, Canada, Sri Lanka, Spain and India. In 2009, she was awarded the Patrick White Award.