Carney was born in Shanghai, China, the daughter of Dora May Sanders and John James Camey, a Canadian who worked as a policeman in Shanghai.
During the early part of her working life Pat Carney ran her own socio-economic consulting business in Yellowknife, NWT. Trading under the name of Gemini North, Ltd., Pat Carney developed useful contacts in the NWT Government and the oil and gas industry. Following the 1970 Centennial Royal Tour of the NWT Pat Carney, at the invitation of the NWT Commissioner, Stuart Hodgson, produced a book about the tour. Carney became a close friend of Stuart Hodgson and accompanied the Commissioner and his party in the 1971 Canadian North Pole expedition an aborted attempt to reach the Pole by Twin Otter in a bid to establish the route for tourist adventurers. Carney was accompanied by her twin brother from Montreal during the flight in and out of the Polar Basin.
Carney's contacts with the oil and gas industry resulted in her being commissioned to conduct a survey of local opinion about the installation of a gas pipeline along the Mackenzie River Valley. Carney organised an information tour of the valley with stops at all the river settlements where the fly-in pipeliners conducted workshops explaining to the local people details about the pipeline project. The pipeliner's tour was shadowed by the president of the Northwest Territories Indian Brotherhood president James Wah-shee and was seen in native rights circles as a demonstration of the Brotherhood's aim to be consulted before any pipeline work started. Shortly after this tour the Brotherhood applied for a development caveat to stop all development on treaty land. This caveat eventually led to the pipeline inquiry which resulted in the project being shelved.
A fictionalized account of these events was published in 2008.
Carney first ran for the Canadian House of Commons as a Progressive Conservative candidate in the 1979 election and was defeated. She was elected in the 1980 election as the Member of Parliament (MP) from Vancouver Centre.
When the Tories formed government under Prime Minister Brian Mulroney as a result of the 1984 election, Carney was appointed to Cabinet as Minister of Energy, Mines and Resources, and was responsible for dismantling the previous Canadian government's unpopular National Energy Program.
In 1986, she was named Minister of International Trade and, as such, was involved in negotiating the Canada-US Free Trade Agreement.
Carney did not run for re-election in the 1988 election.
In 1990, she was appointed to the Canadian Senate by Governor General Ray Hnatyshyn. Carney, a pro-choice advocate of women's rights to abortion, voted against the abortion law proposed by her successor as MP for Vancouver Centre, Kim Campbell. The bill failed in the Senate in a tie vote. In 2000 Carney acted on concerns that landmark lighthouses on both Canadian coasts were being neglected by teaming up with the late Senator Mike Forrestall from Nova Scotia to introduce the Heritage Lighthouse Protection Act, a private members bill which enjoyed consistent multi-party support in subsequent minority Parliaments and which received royal assent in 2008.
More recently Carney mused that the Province of British Columbia might benefit from separating from Canada.
On October 11, 2007, the Prime Minister's Office announced that Senator Carney intended to resign, two years in advance of the mandatory retirement age of 75 years. She officially resigned on January 31, 2008. In 2011, she was made a Member of the Order of Canada "for her public service as a journalist, politician and senator."