Hagedorn was born in Manila to a Scots-Irish-French-Filipino mother and a Filipino-Spanish father with one Chinese ancestor. Moving to San Francisco in 1963, Hagedorn received her education at the American Conservatory Theater training program. To further pursue playwriting and music, she moved to New York in 1978.
Joseph Papp produced her first play Mango Tango in 1978. Hagedorn's other productions include Tenement Lover, Holy Food, and Teenytown. Her mixed media style often incorporates song, poetry, images, and spoken dialogue.
In 1985, 1986, and 1988, she received MacDowell Colony fellowships, which helped enable her to write the novel Dogeaters, which illuminates many different aspects of Filipino experience, focusing on the influence of America through radio, television, and movie theaters. She shows the complexities of the love-hate relationship many Filipinos in diaspora feel toward their past. After its publication in 1990, her novel earned a 1990 National Book Award nomination and an American Book Award. In 1998 La Jolla Playhouse produced a stage adaptation.
She lives in New York City with her daughters.