Paddy O'Reilly was born in Melbourne. She travelled extensively in her early twenties and returned to study literature and Japanese at Deakin and Swinburne Universities in the late 1980s.
After graduating, she spent several years in Japan as a copywriter and translator. In 1992 she translated the Japanese play Itojigoku (Woven Hell) by Rio Kishida, which was performed at the Adelaide and Perth Arts Festivals, and in 1997 she was the Asialink Australia Council writer-in-residence in Japan. Research from that trip was used in her first novel, The Factory.
She has won a number of short story awards and her stories have been anthologised widely, including in five issues of Best Australian Stories.
She published a short story collection, The End of the World, and a novella, The Deep End in 2007. Her second novel, The Fine Colour of Rust, was published in 2012 and her third novel, The Wonders, in 2014. In 2015 and 2016, she released collections of short stories, It Happened in a Holden and It Happened Off the Leash.