Born into a family where both her parents, Randhir Kapoor and Babita, and her elder sister Karisma were actors, Kapoor faced the media spotlight from a very young age, but did not make her acting debut until the 2000 film Refugee. Her melodrama Kabhi Khushi Kabhie Gham... became India's highest-grossing film in the overseas market in 2001, and is one of her biggest commercial successes to date. After receiving negative reviews for a series of repetitive roles, Kapoor accepted more demanding parts in order to avoid being typecast, and was consequently recognized by critics for displaying greater versatility as an actress.

In 2007, Kapoor received her first Filmfare Award for Best Actress for her performance in Jab We Met, a romantic comedy directed by Imtiaz Ali. She went on to play the lead female role in the thriller Kurbaan (2009), for which she earned critical acclaim, and the drama 3 Idiots (2009), which became the highest-grossing Bollywood film of all time. Having done so, Kapoor has established herself as a leading actress of the Hindi film industry. In addition to movie acting, Kapoor is a regular stage performer and has launched her own clothing line in association with being the brand ambassador for the retail chain Globus. Her off-screen life, including her relationship with actor Saif Ali Khan, is the subject of wide media coverage in India.