Deborah Eisenberg was born in Chicago, Illinois, on November 20, 1945. She grew up in Winnetka, a middle-class Chicago suburb. Her father, George, was a pediatrician, and her mother, Ruth, was a housewife. As one of the few Jewish students at her school, wearing a full-torso brace to correct her scoliosis, Eisenberg was a misfit and, according to Dinitia Smith, a self-admitted "behavior problem." Her parents responded by sending her to boarding school in Vermont in the early 1960s. Afterwards, she stayed on in Vermont to attend Marlboro College, studying Latin and Greek. Then Eisenberg left Vermont for New York City, where she earned a B.A. at the New School for Social Research in 1968.

Eisenberg worked in New York for seven years as a secretary and waitress before she became a writer. It was during this time that she met actor Wallace Shawn, whose father was then the editor of the New Yorker. They fell in love, and Shawn encouraged her to begin writing. At first, she concentrated on writing for the stage; her play, Pastorale, was produced by the Second Stage Theatre in 1981. In the mid-1980s, Eisenberg traveled throughout Latin America, an experience that influenced her work for years to come. She claims to have traveled to every country in Central America except Costa Rica and Belize. These were turbulent political times in Latin America, and Eisenberg witnessed firsthand the stark contrast between the privileged classes and the oppressed native peoples, a contrast that features prominently in many of her stories, including "Someone to Talk To."

Transactions in a Foreign Currency, Eisenberg's first collection of short stories, was published in 1986, earning many favorable reviews. The title story won Eisenberg the first of her four O. Henry Awards. In 1987, she received the PEN Hemingway Citation, the Mrs. Giles Foundation Award, a Guggenheim fellowship, and the Whiting Foundation Award. In the late 1980s and early 1990s, she also spent several years teaching, first at Washington University in St. Louis and later at the University of Iowa, as part of the Iowa Writers' Workshop.

In 1992, Eisenberg published her second short-story collection, Under the 82nd Airborne. Though some critics felt it lacked the intensity of her first collection, this new volume garnered Eisenberg more awards; in 1993, she was given the Friends of American Writers Award, the Ingram-Merrill Foundation Grant, and the Award for Literature from the American Academy of Arts and Sciences.

During the mid-1990s, Eisenberg continued to teach, both at the City College of New York and New York University. In 1997, her first two collections were re-released in one volume, entitled The Stories (So Far) of Deborah Eisenberg. Later the same year, she published a new collection, entitled All Around Atlantis, in which the story "Someone to Talk To" appeared. Many critics considered this collection to be her best yet, and the stories "Across the Lake" and "Mermaids" were both O. Henry Award winners (in 1995 and 1997, respectively).

In 1999, Eisenberg took on a new role: actress. She appeared in the play "The Designated Mourner," written by her longtime companion, Wallace Shawn. She did not abandon writing for acting, however. In 2000, she won the Rea Award for the Short Story, and in 2002, her story "Like It or Not" won her yet another O. Henry Award. In January 2006, she released her fifth collection of stories, Twilight of the Superheroes, which includes "Like It or Not" and a story entitled "Some Other, Better Otto," which was originally published in the Yale Review and chosen for Best American Short Stories 2004.

As of 2006, Eisenberg was continuing to write and was teaching writing each fall at the University of Virginia. When she was not teaching in Virginia, she was living in Manhattan with Wallace Shawn.