Born Angela Olive Stalker in Eastbourne, in 1940, Carter was evacuated as a child to live in Yorkshire with her maternal grandmother. As a teenager she battled anorexia. She began work as a journalist on the Croydon Advertiser, following in the footsteps of her father. Carter attended the University of Bristol where she studied English literature.
As well as being a prolific writer of fiction, Carter contributed many articles to The Guardian, The Independent and New Statesman, collected in Shaking a Leg. She adapted a number of her short stories for radio and wrote two original radio dramas on Richard Dadd and Ronald Firbank. Two of her fictions have been adapted for the silver screen: The Company of Wolves (1984) and The Magic Toyshop (1987). She was actively involved in both film adaptations, her screenplays are published in the collected dramatic writings, The Curious Room, together with her radio scripts, a libretto for an opera of Virginia Wolf's Orlando, an unproduced screenplay entitled The Christchurch Murders (based on the same true story as Peter Jackson's Heavenly Creatures) and other works. These neglected works, as well as her controversial television documentary, The Holy Family Album, are discussed in Charlotte Crofts' book, Anagrams of Desire (2003).
At the time of her death, Carter was embarking on a sequel to Charlotte Brontë's Jane Eyre based on the later life of Jane's stepdaughter, Adèle Varens. However, only a synopsis survives.
Her novel Nights at the Circus won the 1984 James Tait Black Memorial Prize for literature.
