Shannon was born in Jackson, Mississippi, where her home has been preserved. She was educated at the Mississippi State College for Women, the University of Wisconsin-Madison, and Columbia University's business school. She later became a photographer of some renown while working for the Works Progress Administration.
But her true love was literature, not photography, and she soon devoted her energy to writing fiction. Her novel The Optimist's Daughter won the Pulitzer Prize in 1973. In later life, she lived near Jackson's Belhaven College. She died of pneumonia in at the age of 92, and is buried in Greenwood Cemetery.