Louis-Dreyfus was born in NYC; her paternal grandparents were Dolores Neubauer and Pierre Louis-Dreyfus, a French Jew who fought in the French Resistance during World War II. Her mother is Judith Bowles and her father is French billionaire Gérard Louis-Dreyfus (who changed his name to William in the 1940s). Her cousin Robert Louis-Dreyfus is the former owner of Adidas (1993-2001) and the current owner of the French football club Olympique de Marseille. Some biographies claim she is related to the late Alfred Dreyfus, a French military officer best known for being the focus of the Dreyfus affair.

Louis-Dreyfus was a cast member on NBC's Saturday Night Live from 1982 to 1985. While on SNL, she met writer Larry David, who would later co-create Seinfeld. Louis-Dreyfus also appeared in quite a few sitcoms and films over the years but is best known for her nine-season role as "Elaine Benes" on NBC's Seinfeld from 1990 to 1998.

After Seinfeld, Louis-Dreyfus began a new NBC sitcom, Watching Ellie, which was soon cancelled. She had a notable recurring guest role as the compulsively lying prosecutor Maggie Lizer on Arrested Development. She currently stars in the CBS sitcom The New Adventures of Old Christine.

She has been married to actor/writer Brad Hall since 1987, whom she met while they were students at Northwestern University in Evanston, Illinois (Hall also worked on SNL). The couple have two sons, Henry (b. 1992) and Charles (b. 1997).

Louis-Dreyfus, well-known for her role in the Seinfeld television series, had been seen as a victim of "the Seinfeld Curse", an apt phrase used to describe actors who, after appearing in an enormously popular television series or movie, have trouble finding popularity in other roles. In Louis-Dreyfus's case, this may also be contributed to typecasting of her in viewer's minds as the distinctive "Elaine Benes". She is also known for her post-Seinfeld "sexy" look, one which she developed in an attempt to draw the public's attention away from her role as Benes. However, the impressive ratings for Old Christine have led some to believe that the "Curse" is broken. She was nominated for a Lead Actress Emmy Award for her work on the first season of Old Christine.