Born Bertha Kaye Batts in 1960, Kaye Gibbons was raised in Rocky Mount, North Carolina. She lived in this very rural area, about fifty miles east of Raleigh, with her mother and father in a four-room farmhouse. Gibbons used her experience in rural Rocky Mount to create the setting for Ellen Foster. After graduating from high school, Gibbons studied American and English literature at North Carolina State University, and she continued her studies at the University of North Carolina at Chapel Hill, where she wrote Ellen Foster. In 1987, at the remarkably young age of twenty-six, Gibbons published Ellen Foster, which she based on her own nightmarish childhood experiences. When Gibbons was only ten years old, her mother committed suicide by overdosing on medication. Like Gibbons, Ellen too is only ten years old when her mother kills herself by ingesting an entire bottle of pills. Also autobiographical is Gibbons's portrayal of Ellen's father, who eventually drinks himself to death, as Gibbons's own alcoholic father did. In Ellen Foster, Gibbons fictionalizes her true life search for a loving home. Like Ellen, Gibbons found such a home with a foster mother after suffering much abuse by her cruel, self-involved relatives.

Set in the mid to late 1970s, Ellen Foster takes place during an especially volatile time. It is during this period that the modern civil rights movement, which began in the early 1950s, fought its continuous battle against racism, especially in rural, southern communities like Ellen's, where racism and race-related hate crimes were notoriously prevalent. In April of 1968 in Memphis, Tennessee (just before the novel begins), the Reverend Martin Luther King, Jr. was shot while he stands on his hotel room balcony. The gunman, escaped convict James Earl Ray, later pleaded guilty to King's murder. Only days after King's untimely death, President Johnson signed the Civil Rights Act of 1968, prohibiting discrimination in the sale of property. Soon afterwards, in 1971, the Supreme Court upheld busing as a legitimate way of attaining racial integration in the public school system. Busing programs, which literally bus black students to attend white schools, were court-mandated in cities such as Charlotte, Boston, and Denver. In Ellen Foster, Ellen attends a racially integrated school where she maintains a close friendship with Starletta, her black best friend who, presumably, is bussed in from a nearby black community.

After leaving college to care for her first child, Gibbons talked her way into attending a graduate course on the history of southern literature. While taking the course, Gibbons read Mark Twain's The Adventures of Huckleberry Finn and was inspired to create a literary voice with the youthful brazenness and intelligence that Huck embodies. It was this idea that began Gibbon's work on Ellen Foster, the title character of which is now frequently compared to Huckleberry Finn, as well as The Catcher in the Rye's Holden Caulfield, and To Kill a Mockingbird's Gem, as each is a young, strong-willed, and precocious character.