P. N. Dhar was born in Kashmir in 1919 to Dr. Vishnu Hakim and Radha Hakim. His wife was the singer-writer Sheila Dhar. He attended Tyndale Biscoe School in Srinagar, India, and then studied economics at the Hindu College of the University of Delhi.
Dhar served as Principal Secretary to the Prime Minister Indira Gandhi during the tumultuous days of the Emergency (1973–1977). He was one of her close advisors, who were collectively known as the "Kashmiri Mafia".
He was awarded the Padma Vibushan, India's second highest civilian award in 2008.
His memoir, Indira Gandhi, the Emergency, and Indian Democracy was published in 2000.