Allende was born in Peru to Chilean parents. She worked as a journalist in Chile until she was forced to flee to Venezuela after the assassination (1973) of her uncle, Chilean Pres. Salvador Allende (Allende, Salvador). In 1981 she began writing a letter to her terminally ill grandfather that evolved into her first novel, La casa de los espíritus (1982; The House of the Spirits). It was followed by the novels De amor y de sombra (1984; Of Love and Shadows), Eva Luna (1987), and El plan infinito (1991; The Infinite Plan) and the collection of stories Cuentos de Eva Luna (1990; The Stories of Eva Luna). All are examples of magic realism, in which realistic fiction is overlaid with elements of fantasy and myth. Her concern in many of these works is the portrayal of South American politics, and her first four works reflect her own experiences and examine the role of women in Latin America. The Infinite Plan, however, is set in the United States, and its protagonist is male.

Allende followed those works of fiction with the novels Hija de la fortuna (1999; Daughter of Fortune), about a Chilean woman who leaves her country for the California gold rush of 1848–49, and Retrato en sepia (2000; Portrait in Sepia), about a woman tracing the roots of her past. El Zorro (2005; Zorro) is a retelling of the well-known legend, and Inés del alma mía (2006; Inés of My Soul) tells the fictionalized story of Inés Suárez, the mistress of conquistador Pedro de Valdivia (Valdivia, Pedro de).

Allende's first nonfiction work, Paula (1994), was written as a letter to her daughter, who died of a hereditary blood disease in 1992. A more lighthearted book, Afrodita: cuentos, recetas, y otros afrodisíacos (1997; Aphrodite: A Memoir of the Senses), shared her personal knowledge of aphrodisiacs and included family recipes. Mi país inventado (2003; My Invented Country) recounted her self-imposed exile after the Sept. 11, 1973, revolution in Chile and her feelings about her adopted country, the United States—where she has lived since the early 1990s—after the September 11 attacks of 2001. She published another memoir about her extended family, La suma de los dias (The Sum of Our Days), in 2007.

In 1996 Allende used the profits from Paula to fund the Isabel Allende Foundation, which supports nonprofit organizations targeting issues that women and girls in Chile and the San Francisco Bay area face.