Peter Straub was born in Milwaukee, Wisconsin, the son of Gordon Anthony Straub and Elvena (Nilsestuen) Straub.
Straub read voraciously from an early age, but his literary interests did not please his parents; his father hoped that he would grow up to be a professional athlete, while his mother wanted him to be a Lutheran minister. He attended Milwaukee Country Day School on a scholarship, and, during his time there, began writing.
Straub earned an honors BA in English at the University of Wisconsin–Madison in 1965, and an MA at Columbia University a year later. He briefly taught English at Milwaukee Country Day, then moved to Dublin, Ireland, in 1969 to work on a PhD, and to start writing professionally
After mixed success with two attempts at literary mainstream novels in the mid-1970s ("Marriages" and "Under Venus"), Straub dabbled in the supernatural for the first time with "Julia" (1975). He then wrote "If You Could See Me Now" (1977), and came to widespread public attention with his fifth novel, "Ghost Story" (1979), which was a critical success and was later adapted into a 1981 film. Several horror novels followed, with growing success, including "The Talisman" and "Black House", two fantasy-horror collaborations with Straub's long-time friend and fellow author Stephen King.
In addition to his many novels, he published several works of poetry during his lifetime.
In 1966, Straub married Susan Bitker.They had two children; their daughter, Emma Straub, is also a novelist. The family lived in Dublin from 1969 to 1972, in London from 1972 to 1979, and in the New York City area from 1979 onwards.
Straub died on September 4, 2022, aged 79, from complications of a broken hip. At the time of his death, he and his wife lived in Brooklyn (New York City).