Dern is the daughter of Bruce Dern and Diane Ladd and the great-granddaughter to former Utah governor George H. Dern. Laura Dern's film debut was in fact a cameo in her mother's film Alice Doesn't Live Here Anymore. In the mid-1980s she gained critical acclaim for roles in films by Peter Bogdanovich ( Mask) and David Lynch ( Blue Velvet, Wild At Heart) and appeared in the Spielberg blockbuster Jurassic Park. In 1992, Dern and her mother Diane Ladd became the first and only mother and daughter ever to be nominated for an Academy Award for acting in the same film in Rambling Rose (film). They, however, did not play a mother and daughter in the film. Dern also starred as Ruth in the satire Citizen Ruth, the directorial debut of Alexander Payne. Dern may also reprise her role as Ellie Sattler in Jurassic Park IV.

Dern has also done much work on television, most notably Afterburn, for which she received a Golden Globe Award for Best Actress in a Mini-Series or Movie. She has also guest-starred on The West Wing, as a voice on King of the Hill, and as a lesbian who coaxes Ellen DeGeneres out of the closet in the famous "Puppy Episode" of the television series Ellen.

Dern is also known as an outspoken activist and supporter of many charitable causes, such as The Children's Health Environmental Coalition, which aims to raise awareness about toxic substances that can affect a child's health.

Dern had high-profile romances with Kyle MacLachlan, Renny Harlin, Jeff Goldblum and Billy Bob Thornton, who ended their relationship abruptly by marrying Angelina Jolie.