Sharp was born in Paisley and educated at Glasgow Academy and the University of Glasgow, which he attended 1871–1872 without completing a degree. In 1872 he contracted typhoid. During 1874–5 he worked in a Glasgow law office. His health broke down in 1876 and he was sent on a voyage to Australia. In 1878 he took a position in a bank in London. He was introduced to Dante Gabriel Rossetti by Sir Noel Paton, and joined the Rossetti literary group; which included Hall Caine, Philip Bourke Marston and Swinburne. He married his cousin Elizabeth Sharp in 1884, and devoted himself to writing full-time from 1891, traveling widely. Also about this time, he developed an intensely romantic but perhaps asexual attachment to Edith Wingate Rinder, another writer of the consciously Celtic Edinburgh circle surrounding Patrick Geddes and "The Evergreen". It was to Rinder he attributed the inspiration for his writings as Fiona Macleod thereafter, and to whom he dedicated his first Macleod novel in 1894. Sharp had a complex and ambivalent relationship with W. B. Yeats during the 1890s, as a central tension in the Celtic Revival. Yeats initially found Macleod acceptable and Sharp not, and later fathomed their identity. Sharp found the dual personality an increasing strain. On occasions when it was necessary for "Fiona Macleod" to write to someone unaware of the dual identity, Sharp would dictate the text to his sister, whose handwriting would then be passed off as Fiona's manuscript. During his Macleod period, Sharp was a member of the Hermetic Order of the Golden Dawn. He died at Ducea di Nelson, Bronte, Sicily: the Dukedom donated to Horatio Nelson from Ferdinand I of the Two Sicilies. In 1910, Elizabeth Sharp published a biographical memoir attempting to explain the creative necessity behind the deception, and edited a complete edition of his works.
Sharp took an early interest in the Belgian avant-garde and disseminated knowledge of La Jeune Belgique movement in a number of essays published in English-language literary periodicals, including two essays entitled La Jeune Belgique, a biographical and critical essay titled Maeterlinck, a reflection on Ruysbroeck and Maeterlinck and a review of Gérard Harry's production of Princess Maleine and The Intruder. He translated Auguste Jenart's The Barbarian into English. His translation of Charles van Lerberghe's Les Flaireurs was published as The Night-Comers in The Evergreen: A Northern Seasonal: Autumn in 1895.
From the Hills of Dream, Threnodies Songs and Later Poems as FM; this included the poem "The Lonely Hunter", which contains perhaps MacLeod's most famous line: Deep in the heart of Summer, sweet is life to me still, But my heart is a lonely hunter that hunts on a lonely hill. This inspired the title of Carson McCullers' debut novelThe Heart Is a Lonely Hunter