Dorothy Hood was born in Bryan, Texas, on August 27, 1918 to Georgianna and Frank Hood and raised in Houston, Texas. Her parents divorced when she was 11 years old. Her father remarried and Hood lived with her mother, who contracted tuberculosis and also suffered from depression. In high school, a teacher submitted Hood's drawings to the National Scholastic Awards, and Hood won a 4-year scholarship to Rhode Island School of Design in the 1930s. After RISD, she lived in New York City for a short time, where she modeled for fashion magazines to pay for classes at the Art League.

In 1941, Hood and two friends took a road trip to Mexico City, where she ended up staying for most of the next two decades. During her time in Mexico, her social circle consisted of writers, artists, musicians, and revolutionaries from Latin America and Europe, including Remedios Varo, Leonora Carrington, Pablo Neruda, Mathias Goeritz, Victor Serge, Sophie Treadwell, and José Clemente Orozco, who eventually became her mentor. Hood thrived in this creative environment. She continued to draw and paint, working in a small space within her limited means. Her early drawings were dark and haunting, sometimes abstract, some with scenes of war and ghostly children. Hood had an exhibition in 1943 at Galería de Arte María Asúnsolo, which drew critical praise.

In 1945, she met Bolivian composer José María Velasco Maidana, and the two were married in 1946. They traveled quite a bit between Mexico City and the U.S. during this time for work and to visit family. During their travels, Hood made important contacts in the art world. She had a solo show at the Willard Gallery in New York City in 1950. When Velasco Maidana fell ill with Parkinson's disease in the 1960s, they moved back to Houston permanently. They settled in a bungalow in the Houston Heights area with a separate studio space in the backyard. Hood worked as a teacher during this time at the Glassell School of Art at the Museum of Fine Arts, Houston. Once she was settled in one place with ample studio space, Hood began to work at a much larger scale. Inspired by Houston's key role in the space race and the expansiveness of Texas, she started producing 10-foot works, her style evolving into more vibrant, bold abstraction and surrealism.

Hood's time in Mexico gave her work a unique perspective, combining Mexican surrealism and abstraction with her own voice, and she was an early pioneer of the color field movement. Her paintings dealt with the void, spirituality, the mythic, and the human condition. She used a combination of techniques to create her distinctive style, combining poured paint with geometric shapes and juxtaposing bold, contrasting colors. Her later drawings were meticulous, precise, and more abstract, evoking aquatic environments, alive with motion.

The 1970s began a period of great success for Hood. She began working with Houston art dealer Meredith Long, who facilitated shows and sales of her work. She had exhibitions all over Texas, including the Contemporary Arts Museum Houston in 1970, and her work reached other parts of the U.S. and Europe as well. She received the Childe Hassam Award in 1973, and had a major show at the Everson Museum in Syracuse, New York in 1974. Hood was tapped to design sets for the Houston Ballet's bicentennial production "Allen's Landing" in 1975. She had shows at Rice University, Tibor de Nagy Gallery in New York City, and the Art Museum of South Texas in Corpus Christi. During this time, Velasco Maidana's health continued to deteriorate and he began suffering from dementia. Hood met Krister Kuylenstierna while traveling in Europe in 1972, and they began writing to each other often. They maintained a close relationship until Kuylenstierna's death in 1987.

In addition to painting, Hood began working in collage in the early 1980s, creating works that also dealt with space and the human psyche. When Velasco Maidana died in 1989, Hood's work became more focused on mortality and spirituality. Soon after Velasco Maidana's death, she began a relationship with Houston geneticist Dr. Krishna Dronamraju, who took over the management of most of her affairs. She was diagnosed with breast cancer in the late 1990s, and died on October 28, 2000, leaving Dronamraju as the sole heir to her estate. The Art Museum of South Texas acquired much of the contents of Hood's studio in 2001. In 2015, the Art Museum of South Texas held the first major retrospective of Hood's life and work in an exhibition titled, "Dorothy Hood: The Color of Being/El Color del Ser". The show was curated by Susie Kalil, who also wrote a book of the same name to accompany the exhibition. The retrospective featured over 160 paintings, drawings, and collages by Hood.