Moorhouse was born in Nowra, New South Wales, Australia, to a father of British ethnicity and a mother a third-generation Australian of British convict descent. His father was an inventor of agricultural machinery and together with his wife established a factory in Nowra to manufacture machinery for the dairying industry. Moorhouse was a constant reader from an early age and decided to be a writer after reading Alice in Wonderland while bed-ridden for months from a serious accident at the age 12 -- ‘After experiencing the magic of this book I wanted to be the magician who made the magic.’ His infant and primary schooling was at Nowra Central and his secondary schooling at Wollongong Secondary Junior Technical High School to the Intermediate Certificate, and Nowra High, to Leaving Certificate. His military service includes army school cadets for two years at WSJT including signals specialist course and cadet officer course. He completed his compulsory national military service of three months basic training and three years part-time in the Reserve Army (infantry) in the University of Sydney Regiment and in the Riverina Regiment, Wagga Wagga (1957-1960).  He studied units of undergraduate political science, Australian history, English, and journalism – law, history and practice, at the University of Queensland as an external student while working as a cadet newspaper journalist in Sydney and as journalist in Wagga Wagga, without taking a degree.

Moorhouse married his high school girl friend, Wendy Halloway (1959) but they separated four years later and had no children. Since then he has led a sometimes turbulent bisexual life shaped by his own androgyny some of which is chronicled in his book Martini: a Memoir (Random House 2001) and he currently lives alone in Potts Point, Sydney. Early in his career he committed himself to a philosophy of personal candour stating that there was no question a person could ask of him to which he would not try to give an honest answer.  In his public commentary he has questioned the notion of separation of public and private life and the concept of privacy.

Throughout his life he frequently goes alone on eight-day, map-and-compass, off-trail treks into wilderness areas. He is also a gourmand. He once said that he was a member of a think tank called Wining and Dining.

During the researching and writing of his League of Nations novels – the ‘Edith Trilogy’ (1989-2011) he lived in Geneva, various parts of France, Washington DC, Cambridge, and Canberra.

His parents are dead and he has two older brothers, Owen and Arthur.