Saunders began studying politics, philosophy, and economics at St Anne's College, Oxford in 1938. In 1940, she decided to become a nurse and trained at Nightingale School of Nursing based at St Thomas's Hospital from 1940-44. Returning to St Anne's College after a back injury in 1944, she took a BA in 1945, qualifying as a medical social worker in 1947 and eventually trained as a Doctor at St Thomas's Hospital Medical School (now merged to form King's College London GKT School of Medical Education) and qualified MBBS in 1957.
In 1948 she fell in love with a patient, David Tasma, a Polish-Jewish refugee who, having escaped from the Warsaw ghetto, worked as a waiter; he was dying of cancer. He bequeathed her £500 (equivalent to £13,106 in 2013) to be "a window in your home".  This donation, which helped germinate the idea which would become St Christopher's, is memorialized with a plain sheet of glass at the hospice's entrance. While training for social work, she holidayed with some Christians, and was converted to Christianity. In the late 1940s, Saunders began working part-time at St Luke's Home for the Dying Poor in Bayswater, and it was partly this which, in 1951, led her to begin study to become a physician.
A year later, she began working at St Joseph's Hospice, a Catholic establishment, in Hackney, East London, where she would remain for seven years, researching pain control. There she met a second Pole, Antoni Michniewicz, a patient with whom she fell in love. His death, in 1960, coincided with the death of Saunders's father, and another friend, and put her into what she later called a state of "pathological grieving". But she had already decided to set up her own hospice, serving cancer patients, and said that Michniewicz's death had shown her that "as the body becomes weaker, so the spirit becomes stronger".
In 1963, three years after the death of Michniewicz, Saunders became familiar with the paintings of Marian Bohusz-Szyszko, a Polish émigré and professor with a degree in fine art. They met and became friends, and she became a patron of his art. A substantial amount of his work is hung at St Christopher's Hospice. Bohusz-Szyszko had a long-estranged wife in Poland, whom he supported, and was a devout Roman Catholic. In 1980, five years after the death of his wife, he married Saunders. She was 61 and he was 79. Bohusz-Szyszko died in 1995, at the age of 94, spending his last days at St Christopher's Hospice.
Saunders claimed that after 11 years of thinking about the project, she had drawn up a comprehensive plan and sought Finance after reading Psalm 37: "Commit thy way unto the Lord; trust also in him; and he shall bring it to pass." She succeeded in engaging the support of Albertine Winner, the deputy chief medical officer at the Ministry of Health at the time. Later, Dame Albertine Winner served as Chairwoman of St. Christopher's. In 1965, Cicely Saunders was appointed Officer of the Order of the British Empire.
In 1967, St Christopher's Hospice, the world's first purpose-built hospice, was established. The hospice was founded on the principles of combining teaching and clinical research, expert pain and symptom relief with holistic care to meet the physical, social, psychological and spiritual needs of its patients and those of their family and friends. It was a place where patients could garden, write, talk – and get their hair done. There was always, Saunders would emphasize, so much more to be done, and she worked in this spirit as its medical Director from 1967, and then, from 1985, as its chairperson, a post she occupied until 2000, when she became President.
Saunders was instrumental in the history of UK medical ethics. She was an advisor to Andrew Mephem whose report led the Rev. Edward Shotter to set up the London Medical Group, a forerunner of the Society for the Study of Medical Ethics, later the Institute of Medical Ethics. She gave one of the first LMG lectures on the subject of pain, developing the talk into "The Nature and Management of Terminal pain" by 1972.
In 1977 Cicely Saunders was awarded an honorary Lambeth doctorate by the Archbishop of Canterbury. In 1979, Queen Elizabeth II honoured Cicely Saunders with the title Dame Commander of the Order of the British Empire (DBE). In 1981 Dame Cicely was awarded the Templeton Prize, the world's richest annual prize awarded to an individual. In 1989, she was appointed to the Order of Merit by Queen Elizabeth II. In 2001 she received the world's largest humanitarian award – the Conrad N. Hilton Humanitarian Prize, worth £700,000 – on behalf of St Christopher's.
In 2002, Saunders co-founded a new charitable organisation, Cicely Saunders International. She was the founding trustee and President. The charity's mission is to promote research to improve the care and treatment of all patients with progressive illness and to make high-quality palliative care available to everyone who needs it – hospice, hospital or home. The charity has co-created the world's first purpose built institute of palliative care – the Cicely Saunders Institute, and supported research to improve the management of symptoms such as breathlessness, action to meet more closely patient and family choice in palliative care and better support for older people.
Saunders died of cancer at age 87 in 2005, at St. Christopher's Hospice, the hospice she had founded.