Baxter was born on 25 November 1959 in London, England.^[3] She is the daughter of an American mother, and has dual citizenship.^[4]

Baxter was educated in the US and France, and in the UK at Ashford School, a co-educational independent school in the town of Ashford in Kent and North London Collegiate School, a girls' independent day school in the district of Edgware in north London. She studied modern history at St Hilda's College, Oxford, graduating in 1981.^[3][5]

After leaving university, Baxter worked for Penguin Books as a copywriter and then Virago Press as a press officer.^[5]

Following a period as an editor for the London edition of Time Out, she joined the New Statesman where she became the political editor.^[6] She then joined The Observer where she eventually became senior associate editor^[7] responsible for the comment section. Baxter left The Observer in 1996.^[7]

Baxter moved to The Sunday Times following an appointment as editor of the News Review section, a post in which she remained for four years.^[8] From July 2001, Baxter was based in New York.^[9] She became the Washington correspondent of The Sunday Times in 2005,^[10] before returning to London in 2009 to become editor of the newspaper's magazine,^[11] which she edited until September 2015. In June 2013, she was appointed the deputy editor of The Sunday Times^[1][12] and has served as a non-executive director of Times Newspapers Holdings Ltd.^[5] She stepped down as deputy editor of The Sunday Times in 2020 ^[2] and is currently director of the Marie Colvin Center for International Reporting at Stony Brook University, New York.^[13] She is a member of IPSO's Complaints Committee. ^[14]

Sarah Baxter's husband, Jez Coulson,^[15] is a British photographer; the couple have two children.^[16]