Waterson was born in Hull, in the East Riding of Yorkshire Her parents died when she was young and she was raised, with her brother Mike and sister Lal, by their maternal grandmother, Eliza Ward, of Irish Gypsy descent.

[1][2] Waterson later recalled that her grandmother was "a lovely singer and knew a lot of parlour ballads and musical songs she had learned from her childhood, and we all used to sing them."

[3] The band began in the early 1960s with the members being Norma, brother Mike, and sister Elaine (known as Lal),[4] with their cousin John Harrison.

[12] In 1987, the group collaborated with Swan Arcade to form Blue Murder, who performed and recorded sporadically with various line-ups.

These have included "A Mighty River of Song" at the Royal Albert Hall on 12 May 2007,[16][17] the BBC Radio 2 Electric Proms concert, "Once in a Blue Moon: A Tribute to Lal Waterson", at Cecil Sharp House in London on 25 October 2007[18] and "A Tribute to Bert," a concert celebrating the life and work of Albert Lancaster Lloyd, at Cecil Sharp House on 15 November 2008.

[23] In 2008 Waterson made a guest appearance alongside brother Mike on Scottish musician James Yorkston's album When the Haar Rolls In, singing her sister Lal's song, "Midnight Feast".

Commenting on the final song, "Shallow Brown", the reviewer noted: "Backed variously by other family members, including Eliza's father Martin Carthy on guitar as well as her cousin Oliver Knight on electric guitar, vocals and cello, there is a real sense of congregation and rootedness about this song, and indeed this record as a whole.

It includes Waterson singing lead on a dramatic, jazz-edged treatment of the Tom Waits song "Strange Weather" and on a version of Nick Lowe's "The Beast in Me".

[32] She was awarded the MBE (Member of the Order of the British Empire) in the Queen's 2003 New Year Honours, for her services to folk music.