Hale was born in Newport, New Hampshire, to Captain Gordon Buell and Martha Whittlesay Buell. Her parents believed in equal education for both sexes. Early on in her life, she was educated by her mother and her brother Horatio who taught her what he had learned at Dartmouth; later on, Hale was an autodidact.

While working as a schoolteacher in 1811, her father opened a tavern called The Rising Sun in Newport; she met David Hale the same year. The couple married at The Rising Sun, on October 23, 1813, and had five children: David (1815), Horatio (1817), Frances (1819), Sarah (1820), William (1822). David Hale, a lawyer, died in 1822 and, in perpetual mourning, Sarah Josepha Hale wore black for the rest of her life.

In 1823, with the monetary support of her late husband's Freemason lodge, she published a collection of her poems titled The Genius of Oblivion.

Her novel, published in the U.S. under the title Northwood: Life North and South and in London under the title, A New England Tale, made her one of the first American women novelists and one of the first of either gender to write a book about slavery. The book, which espoused New England virtues as the model to follow for national prosperity, was immediately successful. The novel not only espoused New England values, but supported the re-Africanization of slaves in the colony of Liberia. It is an argument for Thomas Jefferson's apprehension regarding the difficulty the races would encounter (and have encountered) in living together with the specter of slavery between them. In her introduction to the second edition (1852) Sarah Hale writes in the spirit that is characteristic of the principles by which she lived, "The great error of those who would sever the Union rather than see a slave within its borders, is, that they forget the master is their brother, as well as the servant; and that the spirit which seeks to do good to all and evil to none is the only true Christian philanthropy." The premise of her book is just that. While slavery hurts and dehumanizes slaves absolutely, it also dehumanizes the masters and retards the psychological, moral and technological progress of their world.

The book garnered praise from Reverend John Blake, who asked Hale to move to Boston to serve as the editor of his journal, Ladies' Magazine. She agreed and, from 1828 until 1836, she served as editor in Boston, though she preferred being called an "editress". Hale hoped the magazine would help in educating women, as she wrote, "not that they may usurp the situation, or encroach on the prerogatives of man; but that each individual may lend her aid to the intellectual and moral character of those within her sphere". Her collection Poems for Our Children, which includes the now famous "Mary Had a Little Lamb", was published in 1830, though its original title was "Mary's Lamb". The poem was intentionally written for children, an audience for which many women poets of this period were writing. Hale founded the Seaman's Aid Society in 1833 to assist the surviving families of Boston sailors who died at sea.

Louis Antoine Godey of Philadelphia wanted to hire Hale as the editor of his journal Godey's Lady's Book. He bought the Ladies' Magazine, now renamed American Ladies' Magazine, and merged it with his journal. In 1837 Hale began working as editor of the expanded Godey's Lady's Book but insisted she edit from Boston while her youngest son, William, attended Harvard College. She remained editor at Godey's for forty years, retiring almost at the age of ninety in 1877. During her tenure at Godey's, several important women contributed poetry and prose to the magazine, including Lydia Sigourney, Caroline Lee Hentz, Elizabeth F. Ellet, and Frances Sargent Osgood. Other notable contributors included Nathaniel Hawthorne, Oliver Wendell Holmes, Washington Irving, James Kirke Paulding, William Gilmore Simms, and Nathaniel Parker Willis. During this time, she became one of the most important and influential arbiters of American taste. In its day, Godey's, with no significant competitors, had an influence unimaginable for any single publication today. The magazine is credited with an ability to influence fashions not only for women's clothes, but also in domestic architecture. Godey's published house plans that were copied by home builders nationwide.

During this time, Hale wrote many novels and poems, publishing nearly fifty volumes of work by the end of her life. She also edited several issues of the annual gift book The Opal beginning in the 1840s.

Hale retired from editorial duties in 1877 at the age of 89. The same year, Thomas Edison spoke the opening lines of "Mary's Lamb": the first ever recorded on his newly invented phonograph. Hale died at her home, 1413 Locust Street in Philadelphia, on April 30, 1879. She is buried in a simple grave in the Laurel Hill Cemetery, Ridge Ave., Philadelphia, Pennsylvania.

Hale, as a successful and popular editor, was respected as an arbiter of taste for middle class women in matters of fashion, cooking, literature, and morality. In her work, however, she was reinforcing stereotypical gender roles, specifically domestic roles for women, and celebrated the "separate sphere" for women while casually trying to expand on it. For example, she believed that women shaped the morals of society, and pushed for women to write morally uplifting novels. She wrote that "while the ocean of political life is heaving and raging with the storm of partisan passions among the men of America... [women as] the true conservators of peace and good will, should be careful to cultivate every gentle feeling". She did not support women's suffrage and instead believed in the "secret, silent influence of women" to sway men voters.

Hale was an advocate for education. She supported play and physical education as important learning experiences for children. She wrote in 1829 that "Physical health and its attendant cheerfulness promote a happy tone of moral feeling, and they are quite indispensable to successful intellectual effort." More specifically, she was an early advocate of women's education, particularly higher education for women; she helped in the founding of Vassar College. Her championship of education for women began with her editorship of the Ladies' Magazine and continued until she retired. She wrote no fewer than seventeen articles and editorials devoted to the subject of women's education, and is credited with helping make the founding of an all - women's college acceptable to a public unaccustomed to the idea. Her efforts in promoting women's education were rewarded in 1860 when the Baltimore Female College awarded her a medal "for distinguished services in the cause of female education". As an editor, she created a section headed "Employment for Women" beginning in 1852 discussing women's attempts to enter the workforce. She also published the works of Catharine Beecher, Emma Willard and other early advocates of education for women.

Hale was also a strong advocate of the American nation and union. In the 1820s and 1830s, a time when other American magazines merely compiled and reprinted articles from British periodicals, Hale was among the leaders of a group of American editors who insisted on publishing American writers. In practical terms, this meant that she sometimes personally wrote half of the material published in the Ladies' Magazine. In later years, it meant that she particularly liked to publish fiction with American themes, the frontier, and historical fiction set during the American Revolution. Hale adamantly opposed slavery, but she was equally devoted to the Union. She campaigned in her pages for a unified American culture and nation, frequently running stories in which southerners and northerners fought together against the British, or in which a southerner and a northerner fell in love and married.

Hale is credited as the individual most responsible for making Thanksgiving a national holiday in the United States; it had previously been celebrated only in New England. Each state scheduled its own holiday, some as early as October and others as late as January; it was largely unknown in the American South. Her advocacy for the national holiday began in 1846 and lasted 17 years before it was successful. In support of the proposed national holiday, she wrote letters to five Presidents of the United States -- Zachary Taylor, Millard Filmore, Franklin Pierce, James Buchanan, and Abraham Lincoln. Her initial letters failed to persuade, but the letter she wrote to Lincoln did convince him to support legislation establishing a national holiday of Thanksgiving in 1863. The new national holiday was considered a unifying day after the stress of the American Civil War. Prior to the addition of Thanksgiving, the only national holidays celebrated in the United States were Washington's Birthday and Independence Day.

Hale advocated for the preservation of George Washington's Mount Vernon plantation, as a symbol of patriotism that both the Northern and Southern United States could all support.

She raised the $30,000 (in 1840s money) in Boston for the completion of the Bunker Hill Monument. When construction stalled, Hale asked her readers to donate a dollar each and also organized a week long craft fair at Quincy Market. The fair sold handmade jewelry, quilts, baskets, jams, jellies, cakes, pies, and autographed letters from Washington, James Madison, and the Marquis de Lafayette. She "made sure the 221 - foot obilisk that commemorates the battle of Bunker Hill got built." As "'Oprah and Martha Stewart combined,'" Hale "organized a giant craft fair at Quincy Market." It was much more than a "bake sale" - "refreshments were sold ... but they brought in only a fraction of the profit."

Liberty Ship #1538 (1943 – 1972) was named in her honor. A prestigious literary prize, the Sarah Josepha Hale Award, is named for her.

She was further honored as the fourth in a series of historical bobblehead dolls created by the New Hampshire Historical Society and sold in their museum store in Concord, New Hampshire.

Hale is honored with a feast day on the liturgical calendar of the Episcopal Church (USA) on April 30.

Hale was also honored by having a New York City Board of Education vocational high school named after her. Sarah J. Hale High School was located on the corner of Dean and Pacific streets in Brooklyn, New York. The school closed in June 2001.