Linklater was born in Penarth, Vale of Glamorgan, Wales, to the Orcadian master mariner Robert Baikie Linklater (1865–1916) and his wife Mary Elizabeth (c.1867–1957), daughter of James Young, also a master mariner. He was educated in Aberdeen Grammar School and Aberdeen University, where he was President of the Aberdeen University Debater. He spent many years in Orkney, and identified strongly with the islands, where his father had been born. His maternal grandfather was a Swedish-born sea captain, and he thus had Scandinavian origins through both parents. Linklater is a local Orkney name derived from the Old Norse, and throughout life he maintained a sympathetic interest in Scandinavia.
Linklater served in the Black Watch in 1917–18 before receiving a bullet wound. He then became a sniper. His experiences of trench warfare are described graphically in his memoir Fanfare for a Tin Hat (1970) and at one remove in his 1938 novel The Impregnable Women, which describes an imaginary war against France.
While an undergraduate at Aberdeen University in 1922, Linklater wrote the first musical comedy for the Aberdeen Student Show, ‘Stella, the Bajanella’, with music by JS Taylor. 24 years later, during Linklater's tenure as Rector of Aberdeen University, his play 'To Meet the Macgregors' was performed as the 1946 Student Show.
After abandoning medical studies in Aberdeen, Linklater spent 1925–27 in Bombay, India as an assistant editor of The Times of India and then travelled extensively before returning to Aberdeen as an assistant to the professor of English and then spending 1928–30 as a Commonwealth fellow at Cornell and Berkeley.
As a writer, Linklater's career took off in 1929. Although his greatest success came in the early years of that career, he was to publish 23 novels, three volumes of stories, two books of verse, ten plays, three works of autobiography, and another 23 books of essays and histories. His third novel, Juan in America, was a hugely popular picaresque, with some of the extravagance of Byron's Don Juan, based on his experiences of the absurd during the Prohibition era, with its resulting gangsterism. It is sprinkled with memorable remarks: "I've been married six months. She looks like a million dollars, but she only knows a hundred and twenty words and she's only got two ideas in her head. The other one's hats." The character returned in Juan in China (1937).
Linklater also wrote three children’s novels, The Wind on the Moon (1944), The Pirates in the Deep Green Sea (1949) and Karina With Love (1958). The first of these is about two sisters, whose adventures include becoming kangaroos and rescuing their father from a Hitlerian tyrant, enlisting the anthropomorphic help of a puma and a falcon. Its combination of storytelling skill and treatment of wider themes such as imprisonment and freedom won it the Carnegie Medal.
Linklater's Orcadian and Scottish sympathies led him to some literary and political involvement in the Scottish Renaissance, culminating in his unsuccessful National Party of Scotland candidacy in the East Fife by-election of 1933. Magnus Merriman (1934) was an acerbic fictionalized description of the debacle. He settled in Orkney with his new wife in 1933.
The author's attitude to war and the moral implications of diplomacy became sharper in Judas (1939), which explores the concepts of loyalty and treachery amidst a strong indictment of the desertion of Czechoslovakia by Britain and France in the name of appeasement. His own military career in World War II began with the Royal Engineers in Orkney, went on to the publicity department of the War Office, and culminated in service in Italy in 1944–45, which led to his novel about an equivocal Italian soldier, Private Angelo (1946), which contrasts nationalism with a sense of national community: "I hope you will not liberate us out of existence," is a remark Angelo makes. As one reference work puts it, Angelo "lacks 'the great and splendid gift' of courage, and consequently makes a poor soldier, although he is especially assiduous in retreating, and ultimately deserts." In 1952 Linklater published a semi-official account of The Campaign in Italy.
Linklater moved back to the Scottish mainland in 1947 to Pitcalzean House, near Hill of Fearn. in Ross-shire. His abilities and reputation as a novelist waned somewhat, but he turned to historical writing, and with great effect to autobiography. He went to Korea in 1951 as a temporary lieutenant-colonel.
Linklater served as rector of Aberdeen University in 1945–48 and received an honorary degree the following year. He was appointed CBE in 1954, served as deputy lieutenant of Ross and Cromarty county in 1968–73, and was elected a fellow of the Royal Society of Edinburgh in 1971.
Linklater married Marjorie MacIntyre (1909–1997), an Edinburgh-born, English-educated actress and campaigner for the arts and the environment, on 1 June 1933. She later became active in local politics, and on the Scottish Arts Council in 1957–63. They had four children. Their elder son, Magnus Linklater (born 1942), is a journalist and former editor of The Scotsman and their second, Andro Linklater, was also a writer and journalist. Their elder daughter, Alison (born 1934), is an artist. Their younger daughter, Kristin Linklater, is an actor, voice teacher and author of Freeing the Natural Voice, and their grandson by Kristin, Hamish Linklater, is also an actor. Eric Linklater died in Aberdeen on 7 November 1974 and was buried at Harray on Mainland, Orkney.