Kate McPhelim was born in Richibucto, New Brunswick, Canada, the daughter of Irish immigrants James McPhelim and Margaret Kelly. Her father died when she was two years old, leaving her mother to raise her four children alone. After a brief return to Ireland to live with relatives, financial hardships forced the family to emigrate to Philadelphia. McPhelim published her first poem at the age of 14, and her first short story by the age of 15. During this time, all four of the McPhelim children turned to writing stories, poems and articles for such publications as The Chicago Tribune and Philadelphia's Saturday Night as a source of income for the family.
Two years later in 1880, McPhelim's family moved to Chicago, where she married local businessman Michael Timothy Cleary in 1884. That same year, she and her mother both relocated to Hubbell,Nebraska, where Michael Cleary had established a lumber business in partnership with his brother-in-law John Templeton. Between the years of 1887 and 1894, she gave birth to five children (James, Marguerite, Gerald, Rosemarie and Vera Valentine). Her mother died of pneumonia in 1893, and in 1894 her own life was threatened by a fever following the birth of her youngest daughter, Vera. In that same year, her daughter Marguerite died of typhoid fever at the age of six. During this period, she had befriended fellow writer Elia W. Peattie, and the two bonded over their shared financial, health, and family concerns.
In 1895, Michael Cleary left temporarily for Chicago in an attempt to rescue his business, and during the next three years he traveled frequently in search of a better climate to alleviate his failing health. In 1895, her daughter Rosemarie died at the age of three. Two years later, Kate gave birth to another son (Edward) in 1897. In 1898 her husband sold the lumber business and moved the family to Chicago.
In 1902,, Cleary voluntarily entered a private sanitarium for an addiction to morphine. The following year she was admitted to the Illinois Northern Hospital for the Insane in Elgin, Illinois in order to recover from her morphine dependency. The hospital pronounced her sane in the spring of 1904. In 1905, her husband attempted to commit Cleary involuntarily to an insane asylum, but his attempt was thwarted by a court battle in which a jury determined that she was sane. She died soon thereafter at the age of 41, succumbing to a heart condition she had endured most of her life.
In 1898, Kate McPhelim Cleary was named by The Chicago Chronicle as "One of the three leading women humorists in Chicago". Her short stories regularly appeared in such publications as The Chicago Tribune, Puck, Belford's Monthly, The Chicago Daily News, McClure's, Good Housekeeping, Cosmopolitan, St. Nicholas, and The Youth's Companion. Her poem "Nebraska" was recited at the Chicago's World Fair of 1893. Her feminist novel Like a Gallant Lady was received favorably by the critical press, which compared her novel to the works of Hamlin Garland.