Vargas earned a Bachelor of Arts, magna cum laude, from Harvard College in 1995 and a Juris Doctor from Yale Law School in 2000.

From 2001 to 2002, she was a law clerk for Judge Sonia Sotomayor of the United States Court of Appeals for the Second Circuit.

President Biden nominated Vargas to the seat vacated by Judge Paul G. Gardephe, who assumed senior status on August 9, 2023.

[7] On September 10, 2024, the United States Senate invoked cloture on her nomination by a 52–43 vote.

In response to a February 2025 lawsuit filed by Attorney General Letitia James of New York, Vargas issued an injunction prohibiting DOGE from access Treasury systems.