She was born Diane Nemerov on March 14, 1923, in New York City, where her parents owned Russeks, a fashionable Fifth Avenue fur and clothing store. The middle child of three, she grew up on Central Park West and attended the Ethical Culture and Fieldston schools. Her older brother, Howard, became a well-known poet, and her younger sister, Renée, also achieved recognition as an artist. When she was 14, Diane met Allan Arbus, who worked for Russeks, and they married four years later; they had two daughters, Doon and Amy.
From 1946 until 1969 the Arbuses supported themselves as fashion photographers, working for most of the major American fashion magazines. In the late 1950s Diane Arbus began seriously to pursue her own work, strongly encouraged by the photographer Lisette Model, with whom she studied in 1959. It was Model who helped Arbus identify her desire to photograph forbidden, traditionally taboo subject matter.
Arbus's first non-fashion magazine photographs appeared in Esquire magazine in 1960. She also photographed assignments for Harper's Bazaar, Show, and the London Sunday Times Magazine. She received Guggenheim Fellowships in 1963 and 1966, and in 1965 her work was included in the New Documents exhibition at the Museum of Modern Art in New York City, the only showing of more than a few of her photographs during her lifetime. She taught photography at the Parsons School of Design (1965–1966) and the Cooper Union (1968–1969) in New York City and also taught at the Rhode Island School of Design (1970–1971) in Providence. In 1970 she made a portfolio of ten of her photographs, which was to be the first of a series of limited editions of her work. Five portfolios were sold before Arbus committed suicide in her New York City apartment on July 26, 1971.
In July 1972 Arbus became the first American photographer to be exhibited at the Venice Biennale. In November of that year, the Museum of Modern Art in New York City organized her retrospective, which traveled throughout the United States and Europe for seven years. The book that accompanied the exhibition sold over 200,000 copies. In just over ten years she had gone from being a respected photographer to being recognized as one of the most acclaimed and influential artists of her generation.