Born Sheila Martin Doherty, she grew up on the grounds of the provincial mental hospital where her father, Dr. Charles Edward Doherty, was the superintendent until his death in 1922. After studying at Vancouver's Convent of the Sacred Heart, Sheila Doherty finished her university studies at the University of British Columbia in 1933. She then worked as an elementary and high school teacher throughout British Columbia – including two years in Dog Creek (1935–1937), which served as a basis for her first novel, Deep Hollow Creek. She married Canadian poet Wilfred Watson in 1941.

Watson wrote The Double Hook between 1952 and 1954 in Calgary and revised it during a year-long stay in Paris. It was published in 1959 and was instantly recognized as a modern classic.

In 1976, she and her husband moved to Nanaimo, where they died in 1998.