Ithell was born in 1906 in Assam, India. At the age of one she was sent to stay with relatives in England, and never returned to the country of her birth. Her parents' Scottish and Irish ancestry engendered an interest in Celticism, and her early education was provided by tutors and nannies until she attended Cheltenham Ladies College from 1919 to 1925. She became interested in occultism at the age of 17. Although she studied at the Slade School of Art (1927-1931) she was basically self-taught as an artist. In 1931 her 'Judith Showing the Head of Holofernes' was exhibited at the Royal Academy. The 1936 International Surrealist exhibition in London confirmed her interest in Surrealism. 

An early disciple of Dada, she met Salvador DALI and studied the twilight world of dreams.  For a time she lived in Paris and Athens, where she met Andre BRETON in 1939. She joined the Surrealist group in England later that year and contributed many texts to its journal London Bulletin. She broke with the group after a dispute with ELT MESENS regarding her occult preoccupations. A devoted explorer of decalcomania, fumage, frottage, collage and other forms of pictorial automatism, she invented several magic-inspired techniques of her own.

Two years later she joined Toni Del Renzio and a short-lived dissident ferment around the magazine Arson. In 1943 she and Del Renzio were married. After their divorce in 1947 Ithell settled in Cornwall. Her book, The Living Stones (1957) records her arrival in Lamorna and describes her fascination with the local landscape and Celtic mythology. After an extensive search, Ithell rented 'Vow Cave Studio', close by the stream at the top of the road leading down to Lamorna Cove. Essentially this was a shack with no electricity or running water and here she felt completely in accord with the natural environment which surrounded her. But eventually she found that the Cove was becoming too popular with visitors in the summer, so in 1959 she moved to a cottage in Paul, which she named 'Stonecross Cottage'. 

In 1960 she published a gothic occult novel entitled Goose of Hermogenes. Embodying the timeless energy and spirit of the relentless search for esoteric knowledge, she pursued interests in alchemy, Celtic lore, occult and mythology - also the world of fantasy and the surreal.

Her paintings of flowers and plants indicate awareness of the super-real in everyday reality.  The flowers, executed with technical brilliance, convey the mystical nature of their beauty, and the plant forms have an element of uncompromising truth. She later produced the Fanatasmagie novel.

Michael Canney commented '...Regrettably she did not really become involved with NAG until the surrealist movement was in decline, but she continued to produce works that could only be described as 'surreal' and exhibited them at the Gallery.'

Ithell Colquhoun lived in Paul until her final days in a nursing home in Lamorna. She requested that her ashes be scattered on the rocks at the Cove. After her death, her occult work was left to the Tate, but the bulk of her artwork, around 5000 pieces, was held by the National Trust until 2019, when it, too, was acquired by the Tate. She died in relative obscurity but her written and visual works, with their focus on the occult and esoteric feminism, have in recent years attracted renewed critical acclaim.