Chesler was born in New York State to Jewish immigrants. She attended Bard College, where for two years she had a relationship with a fellow student from Afghanistan. She was briefly married to him in 1961, during which time the couple lived in Afghanistan, in the capital city of Kabul, in the large, polygamous household of her father-in-law. She credits this experience with inspiring her to become an ardent feminist.

According to Chesler, her problems began right upon arrival in Afghanistan. The authorities forced her to surrender her U.S. passport. Because of local custom, she ended up a virtual prisoner in her in-laws' house, treated as chattel by her husband. She reports that the U.S. embassy repeatedly refused to help her leave the country. She also claims that several members of the household inflicted cruelty and abuse on her. After several months, she contracted hepatitis and became gravely ill. She attributes the disease to the actions of one of the women in the household, who deliberately gave her unboiled water because she resented her. At that point, her father-in-law, who had all along disapproved of the marriage, made possible her return to the U.S. on a temporary visa.

She graduated from Bard College. In 1969, she earned a Ph.D. in psychology at the New School for Social Research and embarked on careers as a professor and a psychotherapist in private practice.

In 1969, she cofounded the Association for Women in Psychology. In 1972, she published Women and Madness, whose thesis is "that double standards of mental health and illness exist and that women are often punitively labeled as a function of gender, race, class, or sexual preference."

Chesler taught one of the first Women's Studies classes at Richmond College (which later merged with Staten Island Community College to form the College of Staten Island) in New York City during the 1969-70 school year. During her time at Richmond College, she established many services for female students, including self-defense classes, a rape crisis center, and a child care center. She is one of five cofounders of The National Women's Health Network, with Barbara Seaman, Alice Wolfson, Belita Cowan, and Mary Howell, M.D., and is a charter member of the Women's Forum. She was an editor-at-large and columnist for the magazine On The Issues.

Chesler has recently become known for her campaign against what she considers to be a "new anti-Semitism". She has written about this concept in her book The New Anti-Semitism: The Current Crisis and What We Must Do About It (2003).

A 2003 review in Publishers Weekly describes Chesler's book as a "passionate, highly personal jeremiad" that argues "in our contemporary world anti-Zionism is nearly inseparable from anti-Semitism". The reviewer adds that the book "too often undercuts itself when its author intends to be provocative", citing lines such as "African-Americans (not Jews) are the Jews in America but Jews are the world's niggers". The piece concludes that "Chesler's tone and lack of intellectual rigor will not help her ideas to be heard by those who do not already agree with her".