Jarrett was born in Shiraz, Iran, to American parents James E. Bowman and Barbara Taylor Bowman. One of her maternal great-grandfathers, Robert Robinson Taylor, was an architect who was the first accredited African American architect, and the first African-American student enrolled at the Massachusetts Institute of Technology.
Her father, a pathologist and geneticist, ran a hospital for children in Shiraz in 1956 as part of a program where American physicians and agricultural experts sought to help developing countries' health and farming efforts. When she was five years old, the family moved to London for a year, later moving to Chicago in 1963. Her parents were both African-American; on the television series Finding Your Roots, genealogical research and DNA testing indicated that Jarrett also has French, Scottish, and Native American ancestry. As a child, Jarrett spoke Persian and French. In 1966, her mother was one of four child advocates that created the Erikson Institute. The Institute was established to provide collective knowledge in child development for teachers and other professionals working with young children.
Jarrett graduated from Northfield Mount Hermon in 1974. She earned a B.A. in psychology from Stanford University in 1978 and a Juris Doctor (J.D.) from the University of Michigan Law School in 1981. On May 22, 2016, Jarrett received an honorary degree from Colby College in Waterville, Maine.
Jarrett got her start in Chicago politics in 1987 working for Mayor Harold Washington as Deputy Corporation Counsel for Finance and Development.
Jarrett continued to work in the mayor's office in the 1990s. She was deputy chief of staff for Mayor Richard Daley, during which time (1991) she hired Michelle Robinson, then engaged to Barack Obama, away from a private law firm. Jarrett served as commissioner of the department of planning and development from 1992 through 1995, and she was chairwoman of the Chicago Transit Board from 1995 to 2005.
Until joining the Obama administration, Jarrett was the CEO of the Habitat Company, a real estate development and management company, which she joined in 1995. She has been replaced by Mark Segal, a lawyer who joined the company in 2002, as CEO. Daniel E. Levin is the chairman of Habitat, which was formed in 1971. Jarrett was a member of the board of Chicago Stock Exchange (2000–2007, as chairman, 2004–2007).
She was a member of the Board of Trustees of the University of Chicago Medical Center from 1996 to 2009, becoming vice chairwoman in 2002 and chairwoman in 2006. She also served as Vice Chairwoman of the Board of Trustees of the University of Chicago and a Trustee of Chicago's Museum of Science and Industry. Jarrett serves on the board of directors of USG Corporation, a Chicago-based building materials corporation.
Jarrett's previous year's income, in a 2009 report, was a $300,000 salary and $550,000 in deferred compensation from the Habitat Executive Services, Inc. The Wall Street Journal also reported that she disclosed receiving payments of more than $346,000 for service on boards of directors that reflect her political ties, work in Chicago real estate, and Chicago community development. She was paid $76,000 for service as a director of Navigant Consulting, Inc., a Chicago-based global consulting group with governmental clients. She received $146,600 from USG and $58,000 to serve on the board of Rreef American REIT II, a real estate investment trust based in San Francisco. The Chicago Stock Exchange, Inc., paid her $34,444.
Jarrett was one of President Obama's longest serving advisors and confidantes and was "widely tipped for a high-profile position in an Obama administration."
On November 14, 2008, President-elect Barack Obama selected Jarrett to serve as White House Senior Advisor and assistant to the president for intergovernmental relations and public liaison.
Jarrett was one of three senior advisors to President Obama. She held the retitled position of assistant to the president for intergovernmental affairs and public engagement, managed the White House Office of Public Engagement, Office of Intergovernmental Affairs, and Office of Urban Affairs; she also chaired the White House Council on Women and Girls and the White House Office of Olympic, Paralympic, and Youth Sport. She was part of the US State Visit to the UK in May 2011.
She said that the 2011 report Women in America, which the administration produced for the Council on Women and Girls, would be used to guide policy-making.
Jarrett had a staff of about three dozen and received full-time Secret Service protection. Jarrett's role as both a friend of the Obamas and as senior advisor in the White House was controversial: Robert M. Gates, former Secretary of Defense, objected in his memoirs to her involvement in foreign security affairs; David Axelrod reported in his memoirs Rahm Emanuel's attempts to have her selected as Obama's replacement in the Senate, due to concerns about the difficulty in working with a family friend in a major policy role.
In addition to being senior advisor to the president, Jarrett held other leadership positions and completed further duties. Among those included chairing the White House Council on Women and Girls and co-chairing the White House Task Force to Protect Students from Sexual Assault. In March 2014, she participated as a speaker on Voices in Leadership, an original Harvard T.H. Chan School of Public Health webcast series, in a discussion titled, "Leadership in the White House," moderated by Dr. Atul Gawande.
In 1991, as deputy chief of staff to Mayor Richard Daley, Jarrett interviewed Michelle Robinson for an opening in the mayor's office, after which she immediately offered Robinson the job. Robinson asked for time to think and also asked Jarrett to meet her fiancé, Barack Obama. The three ended up meeting for dinner. After the dinner, Robinson accepted the job with the mayor's office. It was at this time that Jarrett reportedly took the couple under her wing and "introduced them to a wealthier and better-connected Chicago than their own." When Jarrett later left her position at the mayor's office to head Chicago's Department of Planning and Development, Michelle Obama went with her. After leaving the White House, Barack and Michelle Obama moved to the Kalorama neighborhood in the nation's capital just two miles away from their former home. It was reported that Valerie Jarrett will also be moving into the Obama residence. Barack Obama's former deputy press secretary, Eric Schultz, later denied the report in a tweet, writing that Jarret will not be moving in with the Obamas.
Along with Donna Brazile, vice chairwoman of the Democratic National Committee, she is one of the real-life political figures to cameo as herself in the CBS drama The Good Wife.
In 1983 Jarrett married William Robert Jarrett, son of Chicago Sun-Times reporter Vernon Jarrett. She attributes her switch from a private to a public career to their daughter Laura's birth and her own desire to do something that would make their daughter proud.
To one reporter's emailed question about her divorce, she replied, "Married in 1983, separated in 1987, and divorced in 1988. Enough said." In a Vogue profile, she further explained, "We grew up together. We were friends since childhood. In a sense, he was the boy next door. I married without really appreciating how hard divorce would be." William Jarrett died in 1993 at age 40, and at the time of his death was director of obstetrics and gynecology at Jackson Park Hospital.