Her mother Joan (née Bransfield) is a teacher and author of children's books,[9] and her father James Graham is a retired FBI agent.

[citation needed] After high school, Graham enrolled in extension classes at the University of California, Los Angeles, where she studied English for two years.

Her first high-profile starring role came in the Corey Haim/Corey Feldman vehicle License to Drive (1988), as a popular girl named Mercedes Lane, who serves as the love interest of Haim's character.

[15] In 1989, Graham was featured in Gus Van Sant's Drugstore Cowboy as Nadine, a young, drug-addicted accomplice of the two main characters (played by Matt Dillon and Kelly Lynch).

Her performance gave her career an initial boost and earned her a nomination for the Independent Spirit Award for Best Supporting Actress.

[16] After Drugstore Cowboy, she appeared in Lawrence Kasdan's dark comedy I Love You to Death (1990), alongside William Hurt and Keanu Reeves, and the rock-and-roll coming-of-age film Shout (1991), for which she received a nomination for the Young Artist Award for Best Actress Starring in a Motion Picture.

After Graham co-starred with Benicio del Toro in a Calvin Klein commercial directed by David Lynch, the director cast her as Annie Blackburn in Twin Peaks, where she appeared in the final six episodes.

Following the show's cancellation, Graham reprised the role of Blackburn in the 1992 prequel film Twin Peaks: Fire Walk with Me.

Graham's popularity significantly increased after playing a young porn star in the critically acclaimed film Boogie Nights (1997).

While the film itself received mixed reviews, the Rotten Tomatoes summary of critics felt that "Graham shows she can play a central character", but noted "she's not enough to make Committed successful".

In 2002, she starred with Joseph Fiennes in Chen Kaige's English-language debut film Killing Me Softly, which received overwhelmingly negative response from critics and a 0% at Rotten Tomatoes, with the consensus being: "Respected director Chen Kaige's first English-language film is a spectacularly misguided erotic thriller, with ludicrous plot twists and cringe-worthy dialogue".

Graham's other appearances in mainstream fare include playing a fictionalized version of the Jack the Ripper murder victim Mary Kelly in the film From Hell (2001), starring Johnny Depp; Anger Management (2003), starring Adam Sandler and Jack Nicholson; the Farrelly Brothers comedy Say It Isn't So (2001), opposite Sally Field; The Guru, co-starring Jimi Mistry, and Hope Springs (2003), co-starring Colin Firth.

From 2004 to 2008, Graham starred in several independent films Gray Matters, Broken, Adrift in Manhattan (all 2007), and Miss Conception (2008), most of which received generally negative reviews and went largely unnoticed at the box office.

Graham also spoke about developing a comedy film titled The Accidental Virgin, which would have focused on "female sexual confusion", telling the story of a woman who has not had sex in a year.

[30] In 2010, she starred in Boogie Woogie, followed by roles in the unsuccessful films Father of Invention, 5 Days of War, Judy Moody and the Not Bummer Summer (all 2011), and About Cherry (2012).

[37] Other roles include mob lawyer Annette Stratton-Osborne in Behaving Badly and short story writer Mary Bellanova in My Dead Boyfriend (both 2014).

She played the character of Corrine Dollanganger, an evil mother who locks her four children in an attic to receive an inheritance from her dying father.

It starred Stephen Mangan as Andrew, a fraudulent travel writer, who struggles to maintain long-term relationships with two partners, Kim (Graham) and Denise (Jo Hartley), who are not aware of one another.

[49][50] Besides her acting work, Graham is also an activist who serves as a public advocate for the nongovernmental organization (NGO) Children International.

The [Children's Fund] provides free education, clean water and healthcare for communities... We're creating future leaders who will be able to help themselves.

[54][55] To promote Emily's Reasons Why Not, she posed for a LIFE cover story, printed weeks in advance of the assumed series schedule, referring to her as "TV's sexiest star", which appeared in the January 27, 2006, issue.

[56][57] Graham is often cast in sexual roles, including those of Felicity Shagwell (Austin Powers: The Spy who Shagged Me), porn stars Rollergirl (Boogie Nights) and Sharonna (The Guru), prostitute Mary Kelly (From Hell), porn director Margaret (About Cherry), and stripper Jade (The Hangover and The Hangover, Part III).

She stated she finds these types of roles and the issue of sexuality fascinating, and believes that "our culture sends out mixed messages to women about sex.

[61] In 2017, Graham recounted a time in the early 2000s when Hollywood producer Harvey Weinstein indirectly implied that he would give her a role of her choice if she slept with him.