Parveen was born in Junagadh, Gujarat. She did her early schooling from Mount Carmel High School, Ahmedabad and later attended St. Xavier's College, Ahmedabad where she earned a Master of Arts in English literature. Her father, Vali Mohammed Babi, (died 1959), was a system administrator with the Nawab of Junagadh and Jamal Bakhte Babi (died 2001). Parveen was born fourteen years after the marriage of her parents and was their only child. She lost her father at the age of ten.
Parveen never married but media tabloids speculated that she may have had relationships with men in the film-industry such as director Mahesh Bhatt as well as actors Kabir Bedi and Danny Denzongpa. She was also rumoured to have had an affair with her co-star of many films, Amitabh Bachchan, with whom she later developed irrational fears as she accused him of trying to kill her. Bhatt later wrote and directed Arth (1982), a supposedly semi-autobiographical film about his relationship with Babi, and wrote and produced Woh Lamhe (2006) based on his recollection and interpretation of his relationship with Parveen and without any inputs from her. It is uncertain whether Woh Lamhe is a truthful semi-autobiography of Babi rather the details of her character in the movie appears fabrication and manipulative narration of her life.
Parveen's modelling career began in 1972 and was quickly followed by her film debut with the film Charitra (1973) opposite cricketer Salim Durani. The film was a resounding flop but Parveen was noticed and was snapped up for several more films. Her first major hit was Majboor (1974) opposite Amitabh Bachchan. Along with Zeenat Aman, Parveen Babi helped change the image of the Indian film heroine. She was the first Bollywood star to appear on the front page of Time in July 1976, much to the amazement of her contemporaries.
Throughout her career, she was thought of more as a glamorous heroine than a serious actress. She was also known as a fashion icon. Famous designer Manish Malhotra says, "Parveen Babi brought minimalism into fashion. She was always impeccable, not overdoing it even once."
Parveen was considered to be one of the most successful actresses of her era, along with Hema Malini, Rekha, Zeenat Aman, Jaya Bhaduri, Reena Roy and Raakhee. She starred opposite Amitabh Bachchan in eight films, all of which were either hits or super hits. She also starred in other hit films such as Suhaag (1979), Kaala Patthar (1979), and Namak Halaal (1982) opposite Shashi Kapoor, Kala Sona (1975) opposite Feroz Khan, Chandi Sona opposite Sanjay Khan and Jaani Dost (1983) opposite Dharmendra. Towards the end of her career, she appeared in offbeat films like Vinod Pande's Yeh Nazdeekiyan (1982), playing the role of the "other woman" opposite Marc Zuber, and Dil... Akhir Dil Hai (1982), opposite Naseeruddin Shah.
She was often compared with her contemporary Zeenat Aman due to their common image of being sex-symbols. In fact, she acted alongside Zeenat Aman in Mahaan (1983) and Ashanti (1982) (inspired by the American television show Charlie's Angels, with the third role played by Shabana Azmi). In films like Deewar (1975), Shaan (1980) and Namak Halaal (1982), her screen presence may have been minimal as the films were largely worked around the hero, but Babi brought a certain attractive aloofness to the roles and songs she appeared in. In the big hit movie, Kranti (1981), she stole scenes through her supporting role from Hema Malini, the heroine of the film.
Her memorable roles include Jenny in Amar Akbar Anthony (1977), Sunita in Shaan, Anita in Deewaar. She was also the original choice for the female protagonist in Silsila along with Smita Patil, but was later dropped by Yash Chopra, who stated that while Babi was fine, but Smita Patil was hurt, mainly because the filmmaker had asked actor friend Shashi Kapoor to pass the bad news to Smita.
Finally, She "disappeared" from the film scene in 1983, without informing anyone about her whereabouts, a perception that allowed for exaggerated rumours and pompous claims to be whispered in the industry that she might be "under the control" of figures in the "underworld". Many of her completed films released in the following years right uptill her last film Akarshan releasing in 1988.
Her popularity was so immense that movie producers would often line up at her door to sign her for their upcoming movie projects. Her career peaked at the time when most heroines were engulfed in Indian attribute and Babi was one among the few actresses whose attire was completely westernised and this provided her a certain latitude many other contemporary female artists were denied in India's heavily male-dominated and misogynistic cinematic fiefdom. Parveen Babi along with Zeenat Aman with their chiselled looks, well-sculpted bodies and anglicised accents, donned the mantle of the archetypal Indian heroine and imparted to the female prima donna of Bollywood their characteristic mannerisms forever .
As Babi's personality symbolised western standards, it would be difficult for Bollywood producers to personify her role in Indian sentiments. Hence she was given roles which were glamorous and represented standards of a film star quality and established her status as one of the "Top Heroines of Bollywood" or the "Commercially successful Heroine" and this paved the way to differ herself from the other contemporary actress in Bombay's film industry. She had appeared in most of the commercially successful films of that era and her famous co-stars include Amitabh Bachchan, Shashi Kapoor, Feroz Khan, Dharmendra, Rajesh Khanna, Vinod Khanna, Manoj Kumar and Rishi Kapoor who were all the leading stars of 1970s and 1980s. In her acting career, which spanned almost ten years, she has acted in more than fifty films, of which ten were considered to be best. These films were also blockbusters of those times. Parveen Babi replaced the image of saree clad, conventional Indian lead actresses with a glamorous woman look. She never shied away from portraying roles of women having a live-in relationship with men and consuming alcohol openly, both of which were a taboo in those times. She undeniably lit up and overpowered the screen with her presence. The fact that Parveen was paired with Amitabh Bachchan in 8 films during the peak of the Big B mania attests to her stature and star power. It seems to have taken that only a superstar of Bachchan's stature could stand side by side with the presence of Parveen Babi. Amitabh and Parveen complemented each other in the heady first years of the Angry Young Man phenomenon.
She would often appear in popular film songs which have become the craze of the young generations and such song picturisations involved glamorous costumes and ravishing film sets and in time would become hugely popular and this include the ones like Jawaani Jaaneman, Raat Baaqi Baat Baaqi in Namak Halaal, Pyaar Karne Waale in Shaan and Maara Thumka in Kranti, and deliberately this popularity made her among the highest paid actresses in Bollywood at those times. She would appear in front page of every film magazine, whether the Filmfare, The Stardust, Bombay Dyeing or even the prestigious Time.
On 30 July 1983, Parveen Babi left India and the film industry at the height of her career and travelled to various countries for a spiritual journey with U. G. Krishnamurti and her friend Valentine and spent most of the time in California, United States. On 7 April 1984, She was suspected at John F. Kennedy International Airport after she failed to submit her identification papers and as she behaved to be difficult, the authorities handcuffed her and kept her in a general ward with thirty other mentally disturbed patients. The Indian Consul General, who had been informed of the unfortunate incident, had personally come to visit her at the hospital. During U.G.'s visit, Parveen smiled and chatted with the Consul as though nothing had happened.
When asked about how she felt about experiences of people and countries that she lived in, she replied, "my experience of people is that human beings are very good people. However, the powerful, to serve their vested power interests manipulate pressure and use ordinary human beings and their power ploy and force them into negative act. However, I believe, eventually, the human spirit of positive will triumph and as far as other attributes of people are considered I find Americans to be extremely progressive and ingenious race. And I identify a great deal with Americans."
She returned to Mumbai in November 1989 where she was unrecognizable as her former self after having put on a considerable amount of weight. She was rumoured to have been diagnosed with paranoid schizophrenia, a mental illness although she regularly denied this, stating that her being labelled as such was a conspiracy by the film industry and the media to malign her image and make her appear as insane, so that they can cover up their crimes. Some sources indicate that it could have been a situation of acute depression, but not confirmed since she had many failed relationships with one of her former lovers openly humiliating her. This led Parveen to break relationships with most of her close dear ones including her own blood relations, having few contacts with known people and had become reclusive as she distrusted everyone.
She accused many foreign dignitaries as well as Indian film personalities including Amitabh Bachchan, Bill Clinton, Robert Redford, Prince Charles, Al Gore, US government, British government, French government, BJP government, Roman Catholic Church, CIA, CBI, KGB, Mossad of conspiring to kill her but her petition in court was dismissed for lack of evidence and when she was asked to show her evidences by the press, it was some sort of scribblings on notepad In an Interview to a film magazine dated 1989, she said "Amitabh Bachchan is a super international gangster. He is after my life. His goons kidnapped me and I was kept on an Island where they performed a surgery on me and planted one transmitter/chip/electronic bug right under my ear." There was a photograph of Babi showing a scar below her ears.
During the early 1990s, whenever journalists or members of the press would come to her then Kalumal estate apartment in Juhu for an interview, she would often ask them to eat her food and drink her water, so that she might be assured her food is not poisoned and assume her makeup was contaminated, so that her skin should peel off and according to her, the International Mafia had cut off her electricity to harass her. Even before starting an interview, She would keep her dictaphone on, announcing the day, date, time and the name of journalists and publication into the microphone and would record before the conversation began. Many Journalists found her to be very intelligent, vivid, convivial person and one who spoke fluent English. She would later refer to them as "agents of Amitabh Bachchan". One of her neighbours said that when Bachchan's film was shown on cable television, the actress reacted violently and had to be calmed.
Nevertheless, she started a career as an interior decorator in 1983. In 2002, she again hit the headlines when she filed an affidavit in the special court hearing the 1993 serial bomb blasts case, claiming that she had gathered clinching evidence against actor Sanjay Dutt showing his involvement in the case, but she did not turn up in court after being summoned saying that she was afraid of being killed. In the last four years of her life, Babi recorded every phone call, always punctiliously informing the caller about surveillance.
She also had the habit of recording her daily thoughts and activities. Some of the collection of her notepads found in the office of the State Administrator General of the Government of Maharashtra gives her thought on hooks of suspicion and doubt and go on to repeat. What shines through is the meticulousness, say, in the planning of an event at her house. A few months before she died, Babi hosted a small Christmas dinner at her Juhu flat. The names of the seven guests are listed on the notepad, one of them is Reverend Avinash Rangayya (the pastor of All Saints Anglican Church, Church of North India at Malabar Hill). The French dishes on the menu are listed and next to them is a series of reminders: "Call caterer for knives, forks, glasses, spoons." "Get four bakery cakes." "Clean plates, table cloths." "Call florist." "Clean and prepare salad ingredients." And finally: "Asparagus".
She was said to have lived lonely and converted to Christianity during the late 1990s and also ate pork because she found not eating pork as racist.
In an interview in 1998, she said, "I was born a Muslim and later, I converted to Christianity. But I have never done things I didn't believe. Even when I was a Muslim, I didn't understand why it made me a more spiritual entity, if I did not eat pork. I always felt that the essence of spirituality lies in being a good human and following good, positive principles. The Golden Dragon Chinese restaurant at the Taj, those days, was quite famous for pork delicacies and every time I got a break from shooting, I would rush off to the Golden Dragon. Whenever my friends questioned me about my eating pork, I would say that it was more important for me to be a human being than a racist."
However, she managed to maintain her posh penthouse apartment in Mumbai and lived affluently from sound financial investments.
She was found dead on 22 January 2005 after her residential society secretary alerted the police that she had not collected milk and newspapers from her doorstep for three days. The police suspected that she may have been dead for up to 72 hours before her body was found. The cause of her death was not immediately known. She was found to have gangrene of the left foot as a complication of her diabetic condition. A wheelchair was found near her bed and a series of disarranged paintings, clothes, medicines and old newspapers. She had a bandage on her left foot, that she had put on, to treat her gangrene which had resulted from a long ailment of diabetes. It is possible that she was unable to walk in her last days due to a gangrenous foot and required the use of a wheelchair to move inside the house. A post mortem was conducted at Cooper Hospital and reports showed that there were no traces of food in her stomach but some alcohol (possibly from her medication) was found and it is possible that she had not consumed anything for more than three days and as a consequence starved to death. The police ruled out any foul play and it was determined she succumbed due to total organ failure and diabetes.
Parveen Babi converted to Christianity during the last years of her life, as she stated in an interview, and was baptised in a Protestant Anglican Church at Malabar Hill. and expressed a desire to be buried as per Christian rites but her relatives who were Muslims claimed her body after her death and buried her as per Islamic rites. Hence Babi was buried next to her mother at Santacruz, Mumbai on 23 January 2005.
After her death the State Administrator General of Maharashtra became sole custodian of her properties and assets, and took responsiblty for the management of them.
After Parveen Babi’s death chaos erupted when various distant relatives filed petitions with the high court regarding the will of her property which had been lying in the locker of a Junagadh bank, executed jointly by the late actor and her friend Murad Khan Babi, this will stated that 70 per cent of her property was to be put in a trust in her name to help poor members of the Babi family. Twenty per cent was pledged to Murad Khan Babi, for being "a guiding force", and 10 per cent was to be given to Christian missionary funds.
Five years later, due to a shortage of land space for burials, Parveen Babi's grave along with other luminary Bollywood celebrities such as Mohammed Rafi, Madhubala, Sahir Ludhianvi, Talat Mahmood, Naushad Ali who were interred at Santa Cruz Muslim Cemetery were exhumed and their remains were disposed of (relocated) to provide space for new burials.