Keeler was born in Uxbridge, Middlesex. Her father, Colin Keeler (later known as Colin King), abandoned the family during World War II. She was brought up by her mother, Julie Ellen Payne, and stepfather, Edward Huish, in a house made from two converted railway carriages in the Berkshire village of Wraysbury. She was sexually abused as a teenager both by her mother's lover and his friends, for whom she babysat. In 1951 she was sent to a holiday home in Littlehampton because the school health inspector said that she was suffering from malnutrition. At the age of 15, she found work as a model at a dress shop in London's Soho. At age 17, she gave birth to a son after an affair with an African-American United States Air Force sergeant. The child was born prematurely on 17 April 1959, and survived just six days.
That summer, Keeler left Wraysbury, staying briefly in Slough with a friend before heading for London. She initially worked as a waitress at a restaurant in Baker Street, where she met Maureen O'Connor, who worked at Murray's Cabaret Club in Soho. She introduced Keeler to the owner, Percy Murray, who hired her almost immediately as a topless showgirl.
At Murray's she met Stephen Ward, an English osteopath and artist. His practice and his art brought considerable social success, and he made many important friends. Soon the two were living together with the outward appearance of being a couple, but according to her, it was a platonic, non-sexual relationship.
In July 1961, Ward introduced Keeler to John Profumo, 5th Baron Profumo, the Secretary of State for War, at a pool party at Cliveden, the Buckinghamshire mansion owned by Lord Astor. Profumo began a brief affair with Keeler, which ended after he was warned by the security services of the possible dangers of mixing with the Ward circle. Among Ward's other friends, whom Profumo briefly met, was the Russian naval attaché and GRU officer, Yevgeny Ivanov. According to Keeler, she and Ivanov enjoyed a short sexual relationship.
After her relationship with Profumo ended, Keeler was sexually involved with several partners, including jazz singer Aloysius "Lucky" Gordon and jazz promoter Johnny Edgecombe. There was considerable jealousy between the two men; in one quarrel, Edgecombe slashed Gordon's face with a knife. When Keeler ended the relationship with Edgecombe, in December 1962, he turned up at Ward's house in Wimpole Mews, where she was temporarily seeking refuge, and fired five shots at the building. His arrest and subsequent trial brought Keeler to public attention and provided the impetus from which the scandal known as the "Profumo affair" developed. After initially denying any impropriety with Keeler, Profumo eventually confessed and resigned from the government and parliament, causing great embarrassment to his government colleagues who had previously supported him. These events, in the summer of 1963, brought Keeler notoriety; The Economist gave the headline "The Prime Minister's Crisis" alongside a picture of Keeler, with no further explanation.
At the height of the Profumo affair in 1963, Keeler sat for a photographic portrait taken by Lewis Morley. The photo shoot, at a studio on the first floor of Peter Cook's Establishment Club, with Morley was to promote a proposed film, The Keeler Affair, that was never released in the United Kingdom. Keeler was reluctant to pose in the nude, but the film producers insisted. Morley persuaded Keeler to sit astride a plywood chair, so that whilst technically she would be nude, the back of the chair would obscure most of her body. Keeler told cartoon historian Tim Benson in 2007 that she was not nude and was, in fact, wearing “knickers” during the entire photoshoot. 
The photo propelled Arne Jacobsen's Model 3107 chair to prominence, even though the chair used was an imitation of the Model 3107, with a hand-hold aperture crudely cut out of the back to avoid copyright infringement. The chair used is now in the Victoria and Albert Museum. The differences in the designs of the chairs are readily apparent in a side-by-side photograph.
On 18 April 1963, Keeler was attacked at the home of a friend. She accused Gordon, who was arrested and charged. At his trial, which began on 5 June, he maintained that his innocence would be established by two witnesses who, the police told the court, could not be found. On 7 June, principally on the evidence of Keeler, Gordon was found guilty and sentenced to three years' imprisonment. By this time, Ward was facing trial on vice charges, and again Keeler was a main prosecution witness.
Ward's trial, which ran from 22–31 July 1963, has been characterised as "an act of political revenge" for the embarrassment caused to the government. He was accused of living off the avails of prostitution (immoral earnings, in U.K. law) earned through Keeler and Mandy Rice-Davies, on the basis of the small contributions to household expenses or loan repayments the two had made to Ward while living with him. Ward's professional earnings as an osteopath were a substantial £5,500 a year (£107,700 today) at the time these small payments were made. After a hostile summing-up from the trial judge, Ward was convicted, but before the jury returned their verdict, he took an overdose of barbiturates and died before sentence could be passed. In the closing days of Ward's trial, Gordon's assault conviction was overturned by the Court of Appeal when his missing witnesses were found and testified that the evidence given by Keeler was substantially false. Keeler later pleaded guilty to charges of perjury before Sir Anthony Hawke, the Recorder of London, and in December 1963 was sentenced to nine months' imprisonment.
After her release from serving four and a half months in prison in 1964, and two brief marriages that produced two children, Keeler largely lived alone. Most of the considerable amount she made from newspaper stories was dissipated by lawyers; during the 1970s, she said, "I was not living, I was surviving". She published several accounts of her life, in one of which she claimed that she became pregnant as a result of her relationship with Profumo and subsequently had an abortion. Her portrait, by Ward, was acquired by the National Portrait Gallery in 1984.
In 1988, Keeler was featured in Bryan Ferry's promotional video for the single "Kiss and Tell" (originally released on Ferry's seventh solo album, Bête Noire, in 1987) with Mandy Rice-Davies; this was meant to draw more attention to the song's theme. In June 1988 she made an extended appearance on Channel 4 discussion programme After Dark.
In the 1989 film about the Profumo affair, Scandal, actress Joanne Whalley portrayed Keeler. In Andrew Lloyd Webber's stage musical Stephen Ward, which opened at the Aldwych Theatre on 19 December 2013, Keeler was portrayed by Charlotte Spencer.
Keeler was also the title of a song by Phil Ochs about the Profumo affair, released on his posthumous 1989 compilation album The Broadside Tapes 1.