Otsuka was born in May 15, 1962, in Palo Alto, California. She has taught at Columbia University, Yale University, and Columbia University School of the Arts, graduating with a Bachelor of Arts degree in 1984. She later graduated from Columbia University with a Master of Fine Arts in 1999.
Her father worked as an aerospace engineer and her mother worked as a lab technician before she gave birth to Otsuka. Both of her parents were of Japanese descent, with her father being an issei and her mother being a nisei. When she was nine, her family moved to Palos Verdes, California. She has two brothers, one of whom, Michael Otsuka, teaches at the London School of Economics.
Her debut novel When the Emperor was Divine dealt with Japanese American internment during World War II. It was published in 2002 by Alfred A. Knopf. Her second novel, The Buddha in the Attic (2011), is about Japanese picture brides.
Otsuka's historical fiction novels deal with Japanese Americans. Her books call attention to the plight of Japanese Americans during World War II.
Otsuka lives in New York City.