Elaine Pagels wrote The Gnostic Gospels after working as part of an international team dedicated to studying and translating into English the ancient Gnostic books found in Nag Hammadi, Egypt. These texts, which date from about A.D. 120 to 150, are considered by many religious experts to be as important a discovery as the Dead Sea Scrolls. The Gnostics were early Christians whose beliefs and practices put them at odds with orthodox Christianity. In fact, orthodox Christian church leaders considered the Gnostics to be heretics and made a concerted effort after the second century to destroy Gnostic writings.

Pagels argues in her 1979 book that the primary dispute between the orthodox Christians and the Gnostics was not necessarily theological but centered on the Gnostics' refusal to accept the hierarchy and authority of the church as an institution. Gnostics emphasized an individual's relationship with God and believed that self-knowledge was the key to understanding God. This concept undermined the authority and power of the orthodox church. The Gnostics also rejected the literal death and resurrection of Jesus, through which, Pagels argues, the orthodox church found its authority. As well, the orthodox church embraced nearly anyone who would profess faith in Christ, participate in the church's rituals, and recognize the church's authority; the Gnostics required a member to display signs of spiritual maturity and holiness, and, often, to undergo difficult and time-consuming initiations. According to Pagels, the orthodox church's hierarchical structure and wide-spread acceptance helped it to surpass Gnosticism and remain a powerful force for many centuries.

Pagels uses many passages from the Gnostic texts found at Nag Hammadi and elsewhere as well as the New Testament. Her goal in writing the book, according to the first chapter, was to give the layman an understanding of how many of the controversies underlying early Christianity are still relevant for discussions today.