Babitz was born in Hollywood, California, the daughter of Mae, an artist, and Sol, a classical violinist on contract with 20th Century Fox.Her father was of Russian Jewish descent and her mother had Cajun (French) ancestry.Babitz's parents were friends with the composer Igor Stravinsky, who was her godfather.

In 1963, her first brush with notoriety came through Julian Wasser's iconic photograph of a nude, twenty-year-old Babitz playing chess with the artist Marcel Duchamp, on the occasion of his landmark retrospective at the Pasadena Art Museum. The show was curated by Walter Hopps, with whom Babitz was having an affair at the time. The photograph is described by the Smithsonian Archives of American Art as being “among the key documentary images of American modern art”.

Because of her ideas about sexuality, both in writing and life, much of the press over the years has emphasized her various romantic associations with famous men, including singer/poet Jim Morrison, artists (and brothers) Ed Ruscha and Paul Ruscha, and Hopps, amongst others. Babitz appears in Ed Ruscha’s artist book Five 1965 Girlfriends. Eve Babitz had affairs with comedian/writer Steve Martin, actor Harrison Ford, and writer Dan Wakefield, among others. She has been compared favorably with Edie Sedgwick, the protegee of Andy Warhol at The Factory in New York City.

Eve Babitz began her independent career as an artist, working in the music industry for Ahmet Ertegun at Atlantic Records, making album covers. In the late 1960s, she designed album covers for Linda Ronstadt, The Byrds, and Buffalo Springfield. Her most famous cover was a collage for the 1967 album Buffalo Springfield Again.

Her articles and short stories have appeared in Rolling Stone, Vogue, Cosmopolitan, and Esquire magazines. She is the author of several books including Eve's Hollywood; Slow Days, Fast Company; Sex and Rage; Two By Two; and L.A. Woman. Transitioning to her particular blend of fiction and memoir beginning with Eve's Hollywood, Babitz’s writing of this period is indelibly marked by the cultural scene of Los Angeles during that time, with numerous references and interactions to the artists, musicians, writers, actors, and sundry other iconic figures that made up the scene in the 1960s, 70s, and 80s.

In 1997, Babitz was severely injured when ash from a cigar she was smoking ignited her skirt, causing life-threatening third-degree burns over half her body. Because she had no health insurance, friends and family organized a fund-raising auction to pay her medical bills. Friends and former lovers donated cash and artworks to help pay for her long recovery. Babitz became somewhat more reclusive after this incident, but was still willing to be interviewed on occasion.

Babitz died of Huntington's disease at Ronald Reagan UCLA Medical Center in Los Angeles on December 17, 2021, at age 78.