Campbell was born in Guelph, Ontario. Her father, Gerry Campbell, is an immigrant from Glasgow, Scotland, and works as a high school drama teacher at Erindale Secondary School in Mississauga, Ontario. Her mother, Marnie Neve, is a psychiatrist of Sephardic Jewish descent from Amsterdam, the Netherlands. Campbell's maternal grandparents ran a theatre company in the Netherlands and her paternal grandparents were also performers. Her name, "Neve", is a Sephardic Jewish surname and means "snow" in Italian and "oasis" in Hebrew and Arabic. Neve was raised a Catholic but also identifies as Jewish.

Campbell's parents divorced shortly after her birth, and she was raised mostly by her father. She began her public life as a dancer, joining the National Ballet School of Canada at the age of 9, training there and participating in performances of The Nutcracker and Sleeping Beauty. Following several injuries, Campbell moved from dancing into acting at the age of 15, performing The Phantom of the Opera at the Pantages Theatre in Toronto. Her first starring role was on the short-lived Canadian television series Catwalk.

Campbell with co-stars in Three to TangoCampbell rose to wider fame after being cast as the lead character, Julia Salinger, in the teen drama series Party of Five; she played this character from 1994 to 2000. Campbell's first widely released film was 1996's The Craft. She subsequently appeared in the enormously successful Scream horror film trilogy, as well as Wild Things, Blues Brothers 2000, and Three to Tango. She was on People's "50 Most Beautiful People" list in 1998.

Following the end of the Scream series, Campbell's career became more low-key, and she appeared in several films that received a limited theatrical release, but were well reviewed by critics, including the 2000 film, Panic, in which she starred alongside William H. Macy and Donald Sutherland, and the 2003 film, The Company, about Chicago's Joffrey Ballet. Campbell co-wrote, produced, and starred in the film. Despite pre-release publicity suggesting otherwise, Campbell did not break her tradition of having a "no-nudity" clause in her contract for the film. She did break the clause for When Will I Be Loved, released in 2004, a film which was praised by critic Roger Ebert, but which received only a brief and limited theatrical release.

In March 2006, Campbell made her West End theatre debut, in a version of Arthur Miller's Resurrection Blues at the Old Vic theatre. The play, which received mixed reviews, co-stars Matthew Modine and Maximilian Schell, and is directed by Robert Altman, with whom Campbell has previously worked with in The Company.

Campbell married Canadian actor Jeffrey Colt in 1995; they divorced in 1998. She has also dated actors John Cusack, Matthew Lillard, and Pat Mastroianni.

Campbell appears in campaign literature and videos for the Tourette Syndrome Foundation of Canada and the Tourette Syndrome Association, (a similar organisation in the United States). Her younger half-brother, Damian McDonald, has Tourette syndrome. She also has an elder brother, Christian Campbell, and another brother, Alex, both of whom are actors.