Mary O'Halloran was born on May 1, 1943, in Norfolk Nebraska, to James O'Halloran (1903-1960) and Leone Eby O'Halloran (1906-2001). She had four siblings, James Patrick (1926-1982), Joan Pettibone (b. 1928), Peggy Huntzinger (b. 1931), and Maureen McCormick (b. 1941). O'Halloran graduated from Ord Public High School in Ord, Nebraska, in 1961. That same year, the American Legion honored her with its Outstanding Young Woman Award. She began her college career at Creighton University in Omaha, Nebraska, in 1961. She then transferred to Clarke College in Dubuque, Iowa, in 1962, where she received her bachelor's degree in history in 1966. She later did graduate work at Loras College (Dubuque, Iowa) and the University of Northern Iowa. During this same timeframe (1962-1970), O'Halloran was a nun in the order of the Sisters of the Presentation of the Blessed Virgin Mary; she left the order before taking her final religious vows.

Following her college graduation, O'Halloran was parochial school teacher in Dubuque, Mason City, and Waukon (all in Iowa), teaching government and history. She also taught public school at Logan Junior High and Hoover Junior High, in Waterloo, Iowa. She also was the Catholic Student Cetner advisor at the University of Northern Iowa, where she also taught the course, "Theology of Women of the Church."

In 1972, O'Halloran took a leave of absence from the Waterloo School District to run for the Iowa General Assembly as a Democrat. She was elected State Representative for District 36 and was the first woman to be elected from that district. She was reelected in 1974 and 1976. While in the General Assembly, she served on the Iowa House's standing committee on Education, Natural Resources, and County Government. She was also on the Interim Land Use Study Committee, chaired the Democratic Caucus Task Force Committee on Education, and was assistant Democratic minority whip. She was elected to represent Iowa at the National Women's Political Caucus steering committee. She championed women’s rights, working on laws concerning credit discrimination, tax inequities, and rape, as well as discrimination in educational institutions, athletic programs, and curricula. O’Halloran was also an advocate for the environment and a leader in land use and energy legislation. She was instrumental in getting Iowa’s “bottle bill” passed, which established a deposit on bottles and cans. In 1978 she was appointed by President Jimmy Carter to head the Midwest region of the Department of Energy, a position she held until Mr. Carter left office in 1981. She also was a member of the National Education Association, the Iowa State Education Association, the Waterloo Education Association, and the League of Women Voters. She organized the Black Hawk County Women's Political Caucus and was its first co-chairperson.