Born the daughter of Fujiwara no Tametoki. Her exact birth and death years are unknown; she is thought to have been born around 978 and to have died sometime between 1014 and 1025. Nurtured by a father well versed in Chinese classics, she acquired a level of learning rare for women of her time. Around 998 she married Fujiwara no Nobutaka and had one daughter (Daini no Sanmi), but was widowed in 1001. It is said she began writing her tale amid deep grief after her husband's death. Around 1006 she became a lady-in-waiting to Shoshi (Ichijo), a consort of Emperor Ichijo and daughter of Fujiwara no Michinaga, accumulating rich observations of court life. The greater part of The Tale of Genji is thought to have been written during this period. The Genji Monogatari, comprising all fifty-four chapters, is regarded as one of the world's earliest full-length novels, depicting the rise and fall of court aristocratic society and the depths of human emotion through the figure of Hikaru Genji. She also left the Murasaki Shikibu Diary, a record of court life, and the Murasaki Shikibu Shu, a collection of her outstanding waka poems. Her acute observation of human nature and extraordinary literary talent have been celebrated by posterity as the pinnacle of mid-Heian literature.

Introspective with a razor-sharp observational eye, she possessed a profound grasp of the subtleties of human emotion. Her high self-regard and critical faculty are evident in her diary's pointed criticism of her fellow court lady Sei Shonagon. Her aesthetic sensibility, which grasped mono no aware — the pathos of things — as the essence of literature, was expressed with a depth unmatched in Japanese literary history.

The Tale of Genji stands as a landmark in world literary history as one of the earliest full-length novels, and has been translated into more than fifty languages by numerous translators including Arthur Waley, Edward Seidensticker, and Royall Tyler. The literary concept of mono no aware was theorized by Motoori Norinaga and became one of the foundational ideas of Japanese culture. Her image was also adopted for the reverse design of the new 1,000-yen note issued in 2024.