O'Callahan grew up in Brookline, Massachusetts, near the many hospitals of the Boston Longwood Medical Area, in a neighborhood which he has fictionalized in his stories as Pill Hill.
After graduating from the College of the Holy Cross and unsuccessful attempts at law school and writing novels, O'Callahan found his voice as a professional storyteller in the 1970s, one of the early proponents of what has been called the American Storytelling Renaissance.