Born in Beckenham, Kent, she studied at the Beckenham School of Art. She was awarded a scholarship to the Royal College of Art but declined it in favour of an open bursary at the Slade. She entered in 1918, gaining a full scholarship a year later. She picked up many awards whilst there, including the Portrait prize. The latter leading to her decision that she was working to a formula and consequently ceremonially burned all her portraits.

She was a member of the Seven and Five Society from 1921, and exhibited with the New English Art Club from 1922, becoming a member in 1930. Mary married the writer Stephen Potter and with two children continued to paint as she wished. It was while living by the Thames in Chiswick from 1927 that she began to dabble with the watery vision which she would explore for the rest of her life.

Her first solo show was held at the Bloomsbury Gallery in 1932, being well-reviewed by contemporary critics. She went on to have many solo exhibitions with the leading London commercial galleries of the day.

In 1951 the Potter family moved to Aldeburgh and it was this Suffolk fishing town that was to provide the inspiration for her finest art. After her divorce in 1955 her great friendship with the founders of the Aldeburgh Festival, Benjamin Britten and Peter Pears led to them swapping houses for six years, so that she could paint overlooking the sea from Crag House. During her isolation, with only holiday and occasional visits from artists such as John Piper, Prunella Clough and Sidney Nolan she pared down her vision, thinning her paint, blurring outlines and abolishing the horizon line and painted to ever greater acclaim.

In the 1960s and 1970s Potter gained increasing recognition. From 1967 she had seven solo shows with the New Art Centre in London, which continued to champion her work following her death, holding a further five Mary Potter exhibitions.

She was awarded an OBE in 1979, and major retrospective exhibitions of her work were shown at the Tate Gallery in 1980 and the Serpentine Gallery in 1981; the latter opening to great critical acclaim a few months before her death. In a review of that exhibition in The Sunday Times, Marina Vaizey wrote: "The results over the past several decades have been paintings of the most exquisite tensile webs of pale resonant colour, the subjects almost vanished, but the echoes imaginatively suggesting the fullness of life: an evanescent evocation of the shapes and surroundings in which people live. The very delicacy is paradoxically full-blooded".

Kenneth Clarke’s conclusion that her paintings are “enchanting moments of heightened perception”, should stand as her epitaph.