She is the daughter of the renowned literary, radio and television personality Clifton Fadiman and World War II correspondent and author Annalee Jacoby Fadiman. She attended Harvard University, graduating in 1975 from Radcliffe College.

Fadiman's 1997 book The Spirit Catches You and You Fall Down won the National Book Critics Circle Award. Researched in California, it examined an extended Hmong family with a child with epilepsy, and their cultural, linguistic and medical struggles in America.

She has authored two books of essays, Ex Libris: Confessions of a Common Reader (1998) and At Large and At Small: Familiar Essays (2007), and edited Rereadings: Seventeen Writers Revisit Books They Love (2005).

Fadiman was a founding editor of the Library of Congress magazine Civilization, and was the editor of the Phi Beta Kappa quarterly The American Scholar. She was forced out of her position at The American Scholar in 2004 in a dispute over budgetary and other issues.

Since January 2005, in a program established by Yale alumnus Paul E. Francis, Anne Fadiman has been Yale University's first Francis Writer in Residence, a position which allows her to teach one or two non-fiction writing seminars each year, and advise, mentor and interact with students and editors of undergraduate publications.

Fadiman is married to the American author George Howe Colt.