Spence was born in Melrose, Scotland, in October 1825, as the fifth child in a family of eight. Her father David Spence was a banker and lawyer, her mother was Helen nee Brodie. Her eldest sibling, Agnes died in infancy, and her sisters were Jessie, Helen, Mary and brothers David, William and John. Spence said she had a ‘happy childhood’ and felt ‘well brought up’ with her parents being ‘of one mind regarding the care of the family’. Spence had an early memory of the large funeral for Scottish Borders novelist Sir Walter Scott, in 1832. Spence’s schooling from age four to thirteen, was at St. Mary’s Convent School, Melrose whose head teacher was a Miss Phinn, whom Spence admired as ‘a born teacher in advance of her own times’.

In 1839, following sudden financial difficulties, the family emigrated to South Australia, leaving her brother David jnr. in Scotland. Arriving on 31 October 1839 (her 14th birthday), on the Palmyra, at a time when the colony had experienced several years of drought, the contrast to her native Scotland made her “inclined to go and cut my throat”. Nevertheless, the family farm endured seven months of the drought, an “encampment”, growing wheat on an eighty-acre (32 ha) selection before moving to Adelaide.

Her father, David Spence, was elected first Town Clerk of the City of Adelaide. In 1843, the municipality of Adelaide collapsed and her father died three years later. Spence wrote later that ‘after the break up of the municipality and loss of his income, my father lost health and spirits.’ Spence’s mother died in 1886.

Spence’s first work, before the age of 30, was the novel Clara Morison: A Tale of South Australia During the Gold Fever. It was initially rejected but her friend John Taylor, found a publisher in J W Parker and Son and it was published in 1854. Spence received forty pounds for it, but was charged ten pounds for abridging it to fit in the publisher’s standard format. It was given good reviews, and was the first novel written in Australia by a woman. At the same time Spence became employed as a journalist on The Register, but not initially with her own byline.

Around 1854, having become disillusioned with some doctrines of the Church of Scotland, she began attending meetings of the Adelaide Unitarian Christian Church. She preached her first sermons at the Wakefield Street church in 1878, (though she was not the first woman to preach there, that honour going to Martha Turner of Melbourne, sister of Gyles Turner) and she filled in for the minister J. Crawford Woods during his occasional absences between 1884 and 1889.

Spence’s second novel Tender and True was published in 1856, and to her delight went through a second and third printing, though she never received a penny more than the initial twenty pounds. Then followed her third novel, published in Australia as Uphill Work and in England as Mr Hogarth’s Will, published in 1861 and several more though some were unpublished in her lifetime including Gathered In (unpublished until 1977) and Hand fasted (unpublished until 1984).

In 1888 she published A Week In the Future, a tour-tract of the utopia she imagined a century in the future might bring; it was one of the precursors of Edward Bellamy’s 1889 Looking Backward.

Spence was an advocate of Thomas Hare’s scheme for the representation of minorities, at one stage considering this issue more pressing than that of woman suffrage. Spence campaigned for both these themes and spoke at events across Australia and to large political rallies. When Spence became vice-president of the Women’s Suffrage League, she also toured and was recognised as a powerful speaker for feminism and women’s suffrage in Britain and the USA, including speaking in 1893 conferences at Chicago World’s Fair. She returned to find women’s suffrage won in 1894 South Australia, though did not live to see this in her native Scotland, as votes for (some) women were not granted in Britain until 1918.

Spence spoke at her 80th birthday in 1905, in a way which resonates with feminist views up to this day:

On her 80th birthday, in 1905, a public gathering was held and South Australia’s chief justice, Sir Samuel James Way said that Spence was ‘ the most distinguished woman they had in Australia.’

She was an early advocate of the work of Australian artist Margaret Preston and purchased her 1905 still-life “Onions”. Preston received a commission to paint a portrait of Spence in 1911 from a citizens’ committee of Adelaide; now held by the Art Gallery of South Australia.

In 1975 she was honoured on a postage stamp bearing her portrait issued by Australia Post.

The posthumous portrait of her, by Rose McPherson (later to become famous as Margaret Preston) is held by the Art Gallery of South Australia. This portrait was used as the basis of her appearance on 2001 edition of the Australian five dollar note,

Her image appears on the commemorative Centenary of Federation Australian five-dollar note issued in 2001 replacing that of the Queen.