Born in New York City, she moved to Britain, and settled permanently there in 1992.
She studied musical composition, theory and poetry in the USA, and she had planned to be a poet. After writing some poetry a tutor persuaded her to write drama.
After her studies she travelled around the USA taking a variety of jobs until she was 28.
Her first play was Plaza Dolores, written for a workshop run by a friend and producer in a small theatre in Vermont. She then began writing Butterfly Kiss but it was altered over a period of four years before she it was produced in a workshop in a professional theatre in Los Angeles in 1990. She then joined a playwriters group in New York and met other women writers.
At the end of the 1980s her play Girl Bar was produced but was not popular with all lesbians because it addressed issues not previously mentioned such as obsession with a straight girl and racism within the lesbian community. However, the play proved to be popular with audiences, particularly with straight middle-aged women, and in 1994 there was a very successful production in Los Angeles.
In 1990-91 the New Dramatists of New York the playwrights group to which Phyllis Nagy belonged was given money by the New York Time Foundation for exchange visits with the Royal Court Theatre in London. Phyllis Nagy benefitted from the programme and visited London for two weeks in 1991 to give a reading of her play Awake.
She returned to New York and completed her play Weldon Rising. In February 1992 she returned to London and Stephen Daldry, artistic director at the Royal Court Theatre, arranged for Weldon Rising to be put on jointly with the Liverpool Playhouse.
Lois Weaver commissioned Phyllis Nagy to write a piece for Gay Sweatshop and the result was Entering Queens. However, Phyllis Nagy was not happy with Gay Sweatshop's 1992 production as it seemed that the group was not up to capturing its subtlety. She resolved to to work with fringe theatre again.
She received commissions from the Royal Court Theatre, Hampstead Theatre Club, and US theatres.