Carney was born on March 16, 1965, in Fort Smith, Northwest Territories, the son of Verlie Margaret (née Kemper), a stay-at-home mother, and Robert James Martin Carney, a high school principal. His paternal grandparents were Irish, from County Mayo. His father was the Liberal candidate for Edmonton South in the 1980 Canadian federal election, placing second. His mother returned to university to pursue a career in education when Carney was ten.

When Carney was six, his family moved to Edmonton, Alberta. Carney has three siblings — an older brother and sister, Seán and Brenda, and a younger brother Brian. Carney attended St. Francis Xavier High School, before studying at Harvard University on a partial scholarship and financial aid.

Carney graduated from Harvard in 1988 with a bachelor's degree with high honours in economics, before postgraduate studies at the University of Oxford at St Peter's College and Nuffield College, receiving master's and doctoral degrees in the same field in 1993 and 1995, respectively. During his Harvard years, he was backup goalie for the school's ice hockey team. Carney was also co-captain of the Oxford University Ice Hockey Club alongside David Lametti.

In 2011 Carney referred to the Occupy Wall Street protests as "entirely constructive", citing frustrations being felt "particularly in the United States" over inequality and increasing CEO-worker pay gaps. In December 2016, Carney warned of the societal risk of "staggering wealth inequalities" in a Roscoe Lecture at Liverpool John Moores University: "The proportion of the wealth held by the richest 1% of Americans increased from 25% in 1990 to 40% in 2012 ... Globally, the share of wealth held by the richest 1% in the world rose from one-third in 2000 to one-half in 2010."
Carney warned many times that Brexit was expected to negatively influence the UK economy. Consequently, Brexit activists accused him of making statements favouring the UK's continued membership of the European Union (EU) before the British EU-membership referendum. He replied that he felt it was his duty to speak up on such issues.

In September 2018, Philip Hammond, the chancellor of the Exchequer, confirmed speculation that Carney would remain as Governor until January 2020, in order to ensure a "smooth" transition after the UK was set to leave the EU on March 29, 2019, a departure deadline that was missed.

In November 2018, Carney warned that large parts of the British economy were not ready for a no-deal Brexit. Speaking on BBC Radio 4's Today program, Carney explained that fewer than half of businesses have initiated contingency plans.

In February 2019, speaking about the global economy, Carney provided a less negative perspective on Brexit, stating that globalization has resulted in "imbalances of democracy and sovereignty", and that Brexit "is the first test of a new global order and could prove the acid test of whether a way can be found to broaden the benefits of openness while enhancing democratic accountability".
On August 23, 2019, Carney delivered a speech at the Federal Reserve Bank of Kansas City's 2019 annual Jackson Hole Economic Symposium entitled "The Growing Challenges for Monetary Policy in the current International Monetary and Financial System". Carney said that the "widespread use of the US dollar"—the dominant currency pricing—"in trade invoicing, in place of the currency of either the producer or the importer", has had a "destablilizing" effect on the global economy, according to Reuters. About 50 percent of international trade relies on the US dollar as the "currency of choice." This represents "five times greater than the US's share in world goods imports, and three times its share in world exports." Dominant currency pricing is not problematic when there is "synchronized growth" globally, Carney said. When "the tide is rising in America while receding elsewhere", the system needs to be revamped. Carney cited an article by Markus K. Brunnermeier, Harold James, and Jean-Pierre Landau on the potential role of digital currency area (DCA) in redefining the international monetary system.

Speaking just hours after US President Donald Trump posted a tweet blaming Federal Reserve Chairman Jerome Powell's policies for creating fears of an economic recession and threatening China with more retaliatory tariffs, Carney urged central banks to collaborate in replacing the US dollar as reserve currency. …

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The title of Carney's DPhil thesis is The Dynamic Advantage of Competition.

Carney published a book named "Value(s) Building a Better World for All" in 2021. It was positively reviewed by John Ivison for the National Post and by Will Hutton for The Guardian.