Born to parents of Indian and German heritage, Desai grew up in New Delhi, India. She spoke German at home, and Urdu and Hindi to friends and neighbors. In school, she read and wrote in English. She received her B.A. in English literature from the University of Delhi. She has written more than a dozen adult and children's books, notably Fire on the Mountain (1977), for which she received the National Academy of Letters award in India, Clear Light of Day (1980), and The Village by the Sea (1983), which received the Guardian Prize for Children's fiction. Her novels In Custody (1984) and Baumgartner's Bombay (1988) exemplify her liberal ideas and interest in the outsider. Her 1999 novel Fasting, Feasting was the third of her works shortlisted for the Booker Prize. She lives in Massachusetts with her family and teaches at the Massachusetts Institute of Technology.