Loreena McKennitt was born in Morden, Manitoba of Irish and Scottish descent to parents Jack and Irene McKennitt. She moved to Stratford, Ontario in 1981, where she currently lives. Her first album, Elemental, was released in 1985 and attracted global attention with subsequent releases of self-produced work, including To Drive the Cold Winter Away (1987), Parallel Dreams (1989), The Visit (1991), The Mask and Mirror (1994), A Winter Garden (1995) and The Book of Secrets (1997).

McKennitt's single "The Mummers' Dance" was a widespread success, receiving considerable airplay in North American markets during the spring of 1997, and was used as the theme song for the short-lived TV series, Legacy. An Ancient Muse, her first full-length studio album in nine years, was released in November 2006. All of her work has been released under her own label, Quinlan Road.

In 1993, her music became known to a wider audience when she toured Europe supporting Mike Oldfield. In 1995, her version of the traditional Irish song "Bonny Portmore" was prominently featured in the film Highlander 3, causing a large increase of album sales among fans of the films. Her music has also appeared in the movies The Santa Clause, Soldier, Jade, Holy Man, The Mists of Avalon and the television series Roar.

In 1998, McKennitt's fiancé, Ronald Rees, his brother and their good friend drowned during a boating incident. She was deeply affected by the event and subsequently founded the Cook-Rees Memorial Fund in the same year and also released an album of two live performances called Live in Paris and Toronto from which all of the profits were donated to the fund (about $3 million). After this album, McKennitt performed only rarely and didn't release any new recordings until 2006 when she released the studio album An Ancient Muse.

In July 2004, Governor General of Canada, Adrienne Clarkson made her a member of the Order of Canada, the most prestigious civilian honor in Canada.

McKennitt's music has generally been classified as World / New Age / Celtic music even though it contains aspects and characteristics of music from around the globe and is sometimes classified as Folk music in record stores. Before McKennitt composes any music, she engages in considerable research on a specific subject which then forms the general concept of the album. Before creating Elemental and Parallel Dreams, she traveled to Ireland for inspiration from the country's history, folklore, geography and culture. The album The Mask and Mirror was preceded by research in Spain where she engaged in studying Galicia, a Celtic section of Spain, along with its abundant Arabic roots. The result was an album including elements of Celtic and Arabic music. According to the notes of her latest album, An Ancient Muse was inspired primarily by travels among and reading about the various cultures along the Silk Road.

McKennitt is often compared to Enya, but McKennitt's music is more grounded in traditional and classical invocations, using literary works as sources of lyrics and springboards for interpretation such as "The Lady of Shalott" by Lord Tennyson, "Prospero's Speech" (the final soliloquy in William Shakespeare's The Tempest), "Snow" by Archibald Lampman, "Dark Night of the Soul" by St. John of the Cross, William Blake's "Lullaby", Yeats' "The Stolen Child", and "The Highwayman" by Alfred Noyes.

In 2008, McKennitt composed the song entitled "To The Fairies They Draw Near" as the theme song for Disney's direct to video animated film Tinker Bell. The film makers were so impressed with her, that they asked her to do the narration for the film.