Dern was born in Los Angeles, California, the daughter of actors Bruce Dern and Diane Ladd and the great-granddaughter of former Utah governor George Dern. Laura Dern's film debut was a cameo in her mother's film White Lightning. She also made a brief appearance in Alice Doesn't Live Here Anymore, one of Ladd's signature roles. Her mother objected to the 13-year-old's presence on the set of Ladies and Gentlemen, The Fabulous Stains, but a defiant Dern sued for emancipation.

In the mid-1980s she gained critical acclaim for roles in films by Peter Bogdanovich (Mask) and David Lynch (Blue Velvet, Wild at Heart). Dern's starring role in Blue Velvet appeared to be a breakthrough but her next notable film took almost four years to be released, Wild at Heart, also directed by Lynch. Dern's affiliation with Lynch has continued with her recent role in Inland Empire.

In 1992, Dern and her mother became the first mother and daughter to be nominated for an Academy Award for acting i