Wolf was born in Landsberg an der Warthe in the Province of Brandenburg; the city is now Gorzów Wielkopolski, Poland. After World War II, Wolf and her family, being Germans, were expelled from their home on what became Polish territory. They crossed the new Oder-Neisse border in 1945 and settled in Mecklenburg, in what would become the German Democratic Republic, or East Germany. She studied literature at the University of Jena and the University of Leipzig. After her graduation, she worked for the German Writers' Union and became an editor for a publishing company. She joined the Socialist Unity Party of Germany in 1949 and left it in 1989–90. Stasi records found in 1993 showed that she worked as an informant (Inoffizieller Mitarbeiter) during the years 1959—61. The Stasi officers criticized what they called her "reticence", and they lost interest in her cooperation. She was herself then closely watched for nearly 30 years. During the Cold War, Wolf was openly critical of the leadership of the GDR, but she maintained a loyalty to the values of Karl Marx and opposed German reunification.

Wolf's breakthrough as a writer came in 1963 with the publication of Der geteilte Himmel (Divided Heaven). Subsequent works included Nachdenken über Christa T. (The Quest for Christa T.) (1968), Kindheitsmuster (Patterns of Childhood) (1976), Kein Ort. Nirgends (1979), Kassandra (Cassandra) (1983), Medea (1996), and Auf dem Weg nach Tabou (On the Way to Taboo) (1994). Christa T was a work that...while briefly touching on a disconnection from one's family's ancestral home...was concerned with a woman's experiencing overwhelming societal pressure to conform.

Cassandra is perhaps Wolf's most important book, re-interpreting the battle of Troy as a war for economic power and a shift from a matriarchal to a patriarchal society. Was bleibt (What Remains), described her life under Stasi surveillance, was written in 1979, but not published until 1990. Auf dem Weg nach Tabou (1995; translated as Parting from Phantoms) gathered essays, speeches, and letters written during the four years following the reunification of Germany. Her latest work, Leibhaftig (2002) describes a woman struggling with life and death in 1980s East-German hospital, while awaiting medicine from the West. Central themes in her work are German fascism, humanity, feminism, and self-discovery.

Wolf lives in Berlin with her husband, Gerhard Wolf.

Wolf's works have sometimes been seen as controversial since German reunification. Upon publication of Was bleibt, West German critics such as Frank Schirrmacher argued that Wolf failed to criticize the authoritarianism of the East German Communist regime, whilst others called her works "moralistic". Defenders have recognized Wolf's role in establishing a distinctly East German literary voice. With his study of Christa Wolf’s earlier novels and with subsequent essays on her later works Fausto Cercignani has contributed to promote an awareness of the true essence of the narrative production of the East German writer, irrespective of her political and personal ups and downs. The emphasis placed by Cercignani on Christa Wolf’s heroism has opened the way to subsequent studies in this direction.

Wolf received the Heinrich Mann Prize in 1963, the Georg Büchner Prize in 1980, and the Schiller Memorial Prize in 1983, the Geschwister-Scholl-Preis in 1987, as well as other national and international awards. Since reunification, Wolf has received further awards: in 1999 she was awarded the Elisabeth Langgässer Prize and the Nelly Sachs Literature Prize, and Wolf became the first recipient of the Deutscher Bücherpreis (German Book Prize) in 2002 for her lifetime achievement.