Her father is from Paoay, Ilocos Norte, and is related to Valentín Díaz, who was one of the founding signatories in 1892 of the nationalist association La Liga Filipina with José Rizal, whom her famous film was about.

Because of this she enrolled in Communication Arts and intended to stay for only one semester, but her love for theater acting free.

She went to Los Angeles for further studies and graduated from Loyola Marymount University with a degree in Master of Arts in Film and Television in 1978.

Diaz-Abaya's films are known for the struggles of the marginalized, and yet she never thought of a career in filmmaking while growing up in private Catholic schools for the elite.

[3] Diaz-Abaya and her husband, after living in London, went back to the Philippines and got together with some theater friends to start an independent film company, Cine Filipinas, which was funded by their parents.

Brutal was a success and Ishmael Bernal, a highly regarded Filipino filmmaker, saw the film and wanted to meet Diaz-Abaya.

[3] Her early films Brutal, Karnal (Of the Flesh), and Alyas Baby Tsina, sharply condemn the oppressive social system during the administration of Philippine President Ferdinand Marcos.

Her works often deal with the lives of the Filipino poor, women, and children who struggle to survive under harsh conditions.

[4] Arguably her most famous work, José Rizal, featured actor César Montano playing the national hero.

The organization continued by saying: "(Her work) has won acclaim both in the Philippines and abroad for its high level of artistic achievement.

[1] She was buried at Loyola Memorial Park in Marikina until October 2023, when her remains were exhumed and then, transferred to the Libingan ng mga Bayani.

[4] On June 10, 2022, Malacañang Palace, upon the joint recommendation of the National Commission for Culture and the Arts (NCCA) and the Cultural Center of the Philippines (CCP), officially announced Marilou Diaz-Abaya as National Artist for Film and Broadcast Art together with Nora Aunor and Ricky Lee, by virtue of Proclamation no.

She was a director of the Film Development Council of the Philippines, the president of the Marilou Diaz-Abaya Film Institute and Arts Center and Dive Solana Inc., a film instructor at the Ateneo de Manila University, a trustee of the Jesuit Communications Foundation and the AMANU Media Apostolate, and a member of the Silsilah Dialogue Movement for Peace, the Artists for Peace, the Mothers for Peace, and the World Association of Psycho-Socio Rehabilitation.