Castillo was born in Chicago in 1953, the daughter of Raymond and Rachel Rocha Castillo. Her mother was Mexican Indian and her father was born in 1933, in Chicago. She attended Jones Commercial High School and Chicago City College before completing her BS in art, with a minor in secondary education, at Northeastern Illinois University. Ana Castillo received her MA in Latin American from the University of Chicago in 1979, after teaching ethnic studies at Santa Rosa Junior College and serving as writer-in-residence for the Illinois Arts Council. She has also taught at Malcom X Junior College and later on in her life at Sonoma State College. Ana Castillo received her doctorate from the University of Bremen, Germany, in American Studies in 1991. In lieu of a traditional dissertation, she submitted the essays later collected in her 1994 work Massacre of the Dreamers. Castillo, who has written more than 15 books and numerous articles, is widely regarded as a key thinker and a pioneer in the field of Chicana literature. She has said, "Twenty-five years after I started writing, I feel I still have a message to share."
Castillo writes about Chicana feminism, which she refers to as "Xicanisma," and her work centers on issues of identity, racism, and classism. She uses the term "xicanisma" to signify Chicana feminism, to illustrate the politics of what it means to be a Chicana in our society, and to represent the Chicana feminism that challenges binaries regarding the Chicana experience such as gay/straight black/white. Castillo writes, "Xicanisma is an ever present consciousness of our interdependence specifically rooted in our culture and history. Although Xicanisma is a way to understand ourselves in the world, it may also help others who are not necessarily of Mexican background and/or women. It is yielding; never resistant to change, one based on wholeness not dualisms. Men are not our opposities, our opponents, our 'other'". She writes, "Chicana literature is something that we as Chicanas take and define as part of U.S. North American literature. That literature has to do with our reality, our perceptions of reality, and our perceptions of society in the United States as women of Mexican descent or Mexican background or Latina background". Castillo argues that Chicanas must combat multiple modes of oppression, including homophobia, racism, sexism and classism, and that Chicana feminism must acknowledge the presence of multiple diverse Chicana experiences. Her writing shows the influence of magical realism. Much of her work has been translated into Spanish, including her poetry. She has also contributed articles and essays to such publications as the Los Angeles Times and Salon. Castillo is the editor of La Tolteca, an arts and literary magazine.
She was also nominated in 1999 for the "Greatest Chicagoans of the Century" sponsored by the Sun Times.
Her papers are housed at the California Ethnic and Multicultural Archives at the University of California, Santa Barbara.