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Paretsky was born in Ames, Iowa. Her father was a microbiologist and moved the family to Kansas in 1951 after taking a job at the University of Kansas, where Paretsky eventually graduated. Being Jewish, the family was limited in where they could live due to segregated zoning laws at the time, and they ended up renting an old farm house. Her relationship with her parents was strained; her mother was an alcoholic and her father was a harsh disciplinarian.
After obtaining a bachelor's degree in political science from the University of Kansas, she did community service work on the south side of Chicago in 1966 and returned in 1968 to work there. She ultimately completed a Ph.D. in history at the University of Chicago; her dissertation was entitled "The Breakdown of Moral Philosophy in New England Before the Civil War". She also earned an MBA from the University of Chicago Graduate School of Business.
Her husband, Courtenay Wright, was a professor of physics at the University of Chicago; the two were together from 1970 until his death in 2018. (https://chicago.suntimes.com/news/courtenay-wright-sara-paretsky-university-chicago-physicist-dday-witness-obituary/) She is an alumna of the Ragdale Foundation.
She was to appear in an amateur light opera production in 2011.
The protagonist of all but two of Paretsky's novels is V.I. Warshawski, a female private investigator. She created her as a female response to male hard-boiled detectives such as Raymond Chandler's Philip Marlowe.
In 1991 the film V.I. Warshawski was released starring Kathleen Turner. The lead character came from Paretsky, and although the film is based on the novel Deadlock, several changes were made from the book.
Paretsky is credited with transforming the role and image of women in the crime novel. The Winter 2007 issue of Clues: A Journal of Detection is devoted to her work. She is also considered the founding mother of Sisters in Crime, an organization that supports and promotes women in the mystery field.