Born in Hull, Pirie is the son of Douglas Pirie and Eva Madsen. As a child, he attended the Humberstone Foundation School in Old Clee, Lincolnshire.

He graduated with an MA (undergraduate) in History from the University of Edinburgh (1970), with a PhD in Philosophy from the University of St Andrews (1974), and with an MPhil in Land Economy from Pembroke College, Cambridge (1997)

Before co-founding the Adam Smith Institute, Pirie worked for the United States House of Representatives. He was a Distinguished Visiting Professor of Logic and Philosophy at the private Hillsdale College, Hillsdale, Michigan, USA. Pirie was one of three Britons living in the United States who founded the Adam Smith Institute.

The Adam Smith Institute is a UK-based think tank that champions the ideas of free market policy. In January 2010 Foreign Policy and the University of Pennsylvania named the Adam Smith Institute among the top 10 think tanks in the world outside of the US. The Institute is "a pioneer of privatisation" in the UK and elsewhere. It has undertaken policy initiatives aimed at replacing state controls and monopolies with opportunities for competition choice in a broad area. The ASI proposed reforms in taxation, public services, transport and local government. It published Douglas Mason's original paper advocating a poll tax or community charge as it was later called.

His work in helping to develop the Citizen's Charter led to his appointment to the British Prime Minister John Major's Advisory Panel from 1991 to 1995.

Apart from his work with the Adam Smith Institute, Pirie is an author in several fields, including philosophy, economics, and science fiction.