Canavan was born in Kew, in Melbourne, Australia and grew up in the suburb of Ferntree Gully. From early in her childhood she was creative and interested in art, writing and music. After deciding to become a professional artist she completed an Advanced Certificate in Promotional Display at the Melbourne College of Decoration, where she received an award for Highest Aggregate Mark in Art Subjects in 1988.
In 1995 Canavan started The Telltale Art, a freelance business specialising on graphical design services. In that same year she began working for Aurealis, a magazine of Australian Fantasy and Science Fiction, working a do-it-all job as art and cover editor, reading manuscripts, creating web pages and stuffing envelopes. By taking on this job she was able to start writing in her spare time. Canavan states that until the age of 25 she dreamed of writing a novel but lacked the focus to do so. When she turned 25 she took several writing courses, worked on refining her fiction writing skills, while she fought her way through several rejections.