Edelstein was born in Boston, Massachusetts, the daughter of Bonnie and Alvin Edelstein. Her father is a pediatrician at Chilton Memorial Hospital (since retired). Her mother is a retired social worker. The youngest of three children in a Jewish family, she was raised in Wayne, New Jersey, and attended Wayne Valley High School, graduating in 1984.
At 16, Edelstein was a cheerleader for New Jersey Generals. Edelstein encountered trouble when she organized a protest because the team was forcing the cheerleaders to stand in bars while wearing their uniforms. Edelstein said she felt they were treated "like hookers" and organized a cheerleader walkout.
She moved to New York City at the age of 18 to study theatre at New York University's Tisch School of the Arts. While living in New York, she became involved in the club scene (known there only as "Lisa E") and caused enough of a stir in the community to be dubbed New York City's "Queen of the Night" by writer and fellow celebutante James St. James, who briefly refers to Edelstein in his 1999 book Disco Bloodbath.
After being dubbed a "celebutante" by The New York Times magazine during her club kid days, Edelstein used her new-found celebrity to write, compose and star in an original musical called Positive Me in response to the growing AIDS crisis of the 1980s. The play, performed at the La MaMa theatre in New York City, received many accolades. After a regrettable experience hosting Awake on the Wild Side for MTV in 1990, she appeared for a few seconds as a backstage make-up artist in the Jim Morrison biography The Doors followed by guest roles on several popular comedies, including Mad About You, Wings, and The Larry Sanders Show. On Sports Night, she played a sports reporter who claimed to be a former lover of Josh Charles's character whom he did not remember. On Seinfeld, she played George Costanza's frustrated girlfriend, the "Risotto Girl" (the only girlfriend of George's to appear in multiple episodes other than Susan Ross).
Bigger roles in TV dramas soon followed, among them the lesbian sister on ABC's Relativity (1996); a high-priced call girl turned Rob Lowe's date on The West Wing (1999); an assigned male at birth (AMAB) transgender woman on Ally McBeal (2000); and Ben Covington's (Scott Speedman) girlfriend on Felicity (2001). She also continued to land guest-star spots on such shows as ER, Frasier, Just Shoot Me!, Without a Trace, and Judging Amy, as well as small parts in the films What Women Want, Keeping the Faith, As Good as It Gets, and Daddy Day Care.
From 2004-2011, she portrayed her biggest and most notable role to date, Dr. Lisa Cuddy, the Dean of Medicine at Princeton-Plainsboro Teaching Hospital and frequent adversary, friend, and eventual girlfriend of title character Gregory House (Hugh Laurie) on Fox's TV series House. Edelstein has often spoken fondly of her experiences on the show and fellow cast and crew, especially her friendship and strong working relationship with Laurie.
In May 2011, Edelstein announced that she would not return for the eighth and final season of House. Starting in June 2011, she began an arc on The Good Wife as lawyer Celeste Serrano. She guest-starred in Scandal in 2013, and later three episodes of the ABC series Castle.
She currently stars as the lead role of Abby McCarthy in the Bravo series Girlfriends' Guide to Divorce, an hour-long comedy-drama loosely based on the book series by Vicki Iovine and which premiered on December 2, 2014.
She has lent her voice to several animated programs, including King of the Hill, American Dad!, Superman: The Animated Series (as Mercy Graves, Lex Luthor's bodyguard, a role she later reprised in several episodes of Justice League), Legend of Korra (as Kya, Tenzin's sister) and the video game adaptation of Blade Runner.
Edelstein is a passionate supporter of Best Friends Animal Society, of which she is an Ambassador. She supports human rights organizations and is a patron of the arts. She has appeared in numerous magazines, including the September 2010 cover of H magazine. She posed for PETA in an ad promoting vegetarianism, a diet she has followed for most of her life.
On May 25, 2014, Edelstein married artist Robert Russell in Los Angeles.In 2005, she accepted the award for Television Series drama at the 10th Annual Satellite Awards for her portrayal of Dr. Lisa Cuddy on House.In 2011, she won the People's Choice Award for Best Drama Actress in a TV Series for her portrayal of Dr. Lisa Cuddy on House.