Altonaga was born in Baltimore, Maryland, and is an alumna of Florida International University, where she received her Bachelor of Arts degree in 1983. She graduated from the Yale Law School with a Juris Doctor in 1986. She worked as an attorney in the Miami Dade County Attorney's Office from 1986–1987, and then served as a law clerk to Edward B. Davis of the United States District Court for the Southern District of Florida from 1987-88 before returning to the County Attorney's Office until 1996. In 1996, Governor Lawton Chiles appointed her as a County Court Judge on Florida's Eleventh Judicial Circuit Court. In 1999, she was elevated to Circuit Court Judge in that district by Governor Jeb Bush.
She was nominated for a seat on U.S. District Court for the Southern District of Florida by George W. Bush on January 15, 2003, to a seat vacated by Shelby Highsmith. She was confirmed by the United States Senate on May 6, 2003, and received her commission the following day. During her time on the federal bench, Altonaga has been noted for her strong support of the recently created Florida International University College of Law, having served as the keynote speaker in the 2004 Convocation, judged several moot court competitions, and employed FIU law students as summer interns.
In July 2005, following the retirement of Justice Sandra Day O'Connor, Judge Altonaga's name was raised as a potential George W. Bush Supreme Court candidate, a position for which she was promoted by Florida's Hispanic community. However, it would be a very rare occurrence for a sitting District Court judge to be appointed to the Supreme Court. At 43, Altonaga was younger than most other Hispanics or women who were being mentioned as possible nominees, which might have made her a more attractive choice to the President. However, President Bush went through several other nominees, and nominated Judge Samuel Alito for the position.
On June 14, 2007, Altonaga ruled that US Sugar Corporation's practice of pumping untreated wastewater into Lake Okeechobee was in violation of the Clean Water Act. Largely as a result of this decision, on June 25, 2008 the state of Florida announced plans to purchase 300 square miles (780 km2) of land controlled by US Sugar, which will be used to restore vital water flow between Lake Okeechobee and the Everglades National Park, helping to ensure its survival in the face of competition for water from surrounding development.
She also presided over the trial of Charles McArthur Emmanuel, son of former Liberian dictator Charles Taylor, for torture.
In September 2006, Dubai Sheikh Mohammed bin Rashid Al Maktoum was accused of encouraging the abduction and enslavement of thousands of boys for use as jockeys in camel racing. A class action suit was filed in the state of Florida in the United States. In July 2007, Judge Altonaga granted a motion to dismiss the suit because none of the involved parties resided in the United States.
In 2012, Judge Altonaga disqualified the entire firm of Morgan & Morgan PA from a class action suit for “deplorable behavior” including insisting on holding depositions in a Dunkin' Donuts, appearing at depositions dressed in t-shirt and shorts, bragging about playing Angry Birds during depositions, and drawing then showing off “pictures of male genitalia” during depositions.
On December 5, 2016, Judge Altonaga rejected the U.S. Securities and Exchange Commission’s $450,000 penalty against the City of Miami’s budget director for deceiving municipal bond investors, instead fining Michael Boudreaux $15,000.