Born in Cochrane, Ontario, Canada, Ellis and her family moved several times during her childhood due to her parent's work. Ellis decided to start writing when she was 11 or 12 years old.
Much of her work as a writer has been inspired by her travels and conversations with people from around the world and their stories. She has held many jobs advocating for the peace movement and the anti-war movement.
She travelled to Pakistan in 1997 to interview refugees at an Afghan refugee camp. From these interviews, she wrote The Breadwinner series, which includes The Breadwinner (2001), a book about a girl named Parvana, Parvana's Journey (2002), its sequel, Mud City (2003), about Shauzia, Parvana's best friend, and My Name is Parvana (2011), the final book in the series. While The Breadwinner was inspired by an interview with a mother and a girl who disguised herself as a boy in a refugee camp, the subsequent books in the series were more imaginative explorations of how children would survive.
In 1999, her novel Looking for X was published. It follows a young girl in her day-to-day life in a poor area of Toronto and it received the Governor General's Literary Award in 2000.
One of her best known works is the 2004 book The Heaven Shop, which tells of a family of orphans in Malawi who are struggling with sudden displacement as a result of the HIV/AIDS impact. The novel was written to dispel myths about HIV/AIDS and celebrate the courage of child sufferers.
In 2006, she wrote the best-seller, I Am a Taxi, which tells the story of a Colombian boy named Diego whose family was accused of smuggling coca paste, which is used to produce cocaine. After an accident causes Diego's family to owe money to the prison in which they are incarcerated in, the boy must earn them money. He ends up in the coca "pits" where the coca leaves are made into coca paste, and the story follows his adventures from there. The sequel, Sacred Leaf, is about Diego's time with the Ricardos (a family who helped Diego) and a giant coca leaf protest.
In 2007, with Eric Walters, Ellis wrote Bifocal, a novel about racism and terrorists in Canada.
In 2008, Ellis published Lunch with Lenin and Other Stories, a collection of short stories that explores the lives of children who have been affected directly, or indirectly, by drugs. The stories are set against backdrops as diverse as the remote north of Canada to Moscow's Red Square to an opium farm in Afghanistan.
In 2014, she published Moon at Nine, a YA novel based on the true story of two teenage girls who are arrested and thrown in prison in Iran, a country where homosexuality is punishable by death.
In 2006, Ellis was named to the Order of Ontario.
Ellis is the recipient of the Governor General's Award, the Jane Addams Children's Book Award, the Vicky Metcalf Award for a body of work, an ALA Notable, and the Children's Africana Book Award Honor Book for Older Readers.
In December 2016, Ellis was named a Member of the Order of Canada.
Ellis is a philanthropist, donating almost all of her royalties on her books to such organizations as "Canadian Women for Women in Afghanistan" and UNICEF. Due to this work, she has been threatened by the Taliban.