Pargeter was born in the village of Horsehay (Shropshire, England). Her father was a clerk at a local ironworks. She was educated at Dawley Church of England School and the old Coalbrookdale High School for Girls. She had Welsh ancestry, and many of her short stories and books (both fictional and non-fictional) are set in Wales and its borderlands, or have Welsh protagonists.
During World War II, she worked in an administrative role in the Women's Royal Naval Service (the "Wrens") and had reached the rank of petty officer by 1 January 1944 when she was awarded the British Empire Medal (BEM) in the New Year Honours.
In 1947 Pargeter visited Czechoslovakia and became fascinated by the Czech language and culture. She became fluent in Czech and published award-winning translations of Czech poetry and prose into English.
She devoted the rest of her life to writing, both nonfiction and well-researched fiction. She never attended university but became a self-taught scholar in areas that interested her, especially Shropshire and Wales. Birmingham University gave her an honorary master's degree. She never married, but did fall in love with a Czech man. She remained friends with him after he married another woman. She was pleased that she could support herself with her writing from the time after the Second World War until her death.
Pargeter wrote under a number of pseudonyms; it was under the name Ellis Peters that she wrote her later crime stories, especially the highly popular series of Brother Cadfael medieval mysteries, a Benedictine monk at the Abbey in Shrewsbury. That pseudonym was drawn from the name of her brother, Ellis, and a version of the name of the daughter of friends, Petra. Many of the novels were made into films for television. Although she won her first award for a novel written in 1963, her greatest fame and sales came with the Cadfael Chronicles, which began in 1977. At the time of the 19th in the series of 20 novels, sales exceeded 6.5 million. The Cadfael Chronicles drew international attention to Shrewsbury and its history, and greatly increased tourism to the town. In an interview in 1993, she mentioned her own work before the Second World War as a chemist's assistant, where they prepared many of the compounds they sold. "We used to make bottled medicine that we compounded specially, with ingredients like gentian, rosemary, horehound. You never see that nowadays; those tinctures are never prescribed. They often had bitters of some sort in them, a taste I rather liked. Some of Cadfael’s prescriptions come out of those years."
Her Cadfael novels show great appreciation for the ideals of medieval Catholic Christianity, but also a recognition of its weaknesses, such as quarrels over the finer points of theology (The Heretic's Apprentice), and the desire of the church to own more and more land and wealth (Monk's Hood, Saint Peter's Fair, The Rose Rent).
She died at her home in Madeley, Shropshire in 1995 at the age of 82. She had recently returned home from hospital following a stroke. On 14 September 1997, a new stained glass window depicting St Benedict was installed in Shrewsbury Abbey and was dedicated to the memory of Edith Pargeter, with funds raised by donations from admirers of the author.
The Mystery Writers of America gave Pargeter their Edgar Award in 1963 for Death and the Joyful Woman. In 1980, the British Crime Writers Association awarded her the Silver Dagger for Monk's Hood. In 1993 she won the Cartier Diamond Dagger, an annual award given by the CWA to authors who have made an outstanding lifetime's contribution to the field of crime and mystery writing. Pargeter was appointed Officer of the Order of the British Empire (OBE) "for services to Literature" in the 1994 New Year Honours. To commemorate Pargeter's life and work, in 1999 the CWA established their Ellis Peters Historical Dagger award (later called the Ellis Peters Historical Award) for the best historical crime novel of the year.
Pargeter's Cadfael Chronicles are often credited for popularizing what would later become known as the historical mystery.