She made her first professional stage appearance in 1967 as Dame Margery in Thomas Dekker's The Shoemaker's Holiday at the Guthrie Theater after which she became active in regional theatre productions.
She made her Broadway theatre debut in 1975 as Queen Isabella of Bavaria in the original production of Larry Grossman and lyrics by Hal Hackady's Goodtime Charley.
Although the show ran for only a few weeks, Keagy garnered high praise from critics for her performance and earned a Drama Desk Award nomination.
She almost immediately joined the original cast of Richard Rodgers's musical version I Remember Mama, replacing Dolores Wilson as Aunt Jenny.
Keagy remained active in theatre during the early 1980s, returning to Broadway for the original productions of Tom Savage's Musical Chairs (1980) and John Kander and Fred Ebb's Woman of the Year (1983).