Walsh graduated from Catalina Magnet High School and studied acting at the University of Arizona before dropping out.

Walsh moved to New York City and joined a comedy troupe, Burn Manhattan, supporting herself by waitressing.

[14] After playing Cathy Buxton in the Homicide: Life on the Street episode "Stakeout" in 1996 and Navy Lieutenant Kirstin Blair in the Law & Order episode "Navy Blues", Walsh's first major television appearance was in 1997, when she appeared on The Drew Carey Show as Drew Carey's love interest, Nicki Fifer.

In 2005, she was cast in her breakout role in the ABC series Grey's Anatomy, as Dr. Addison Montgomery, the estranged spouse of Derek Shepherd ("Dr. McDreamy", played by Patrick Dempsey).

Taye Diggs, Tim Daly, Amy Brenneman, Chris Lowell, and Audra McDonald were cast in the spin-off, Private Practice.

In 2013, Walsh appeared in Full Circle, a 10-episode ensemble drama series created by Neil LaBute and airing on DirecTV's Audience Network channel.

She gained attention in a major Hollywood production as Will Ferrell's character's wife in the family comedy, Kicking & Screaming.

In May 2010, Walsh made her off-Broadway debut opposite Paul Sparks in Atlantic Theater Company's world premiere of Stephen Belber's Dusk Rings a Bell.

[24] She also had a long theater career in Chicago, which included roles in Happy Birthday Wanda June, The Danube, Moon Under Miami and Troilus and Cressida.

[34] In January 2008, Walsh participated in a video for Democratic presidential candidate Barack Obama called "Yes We Can", produced by will.i.am of the Black Eyed Peas.

[36][37] In July 2008, Walsh was nominated as a candidate on the Unite for Strength slate for a place on the national governing board of the Screen Actors Guild (SAG) in elections scheduled for September 18, 2008.

In January 2009, she spoke at the Planned Parenthood Presidential Inauguration Brunch in Washington, D.C.[41] As announced in late 2009, Walsh partnered with ocean conservancy and advocacy group Oceana to call for increased sea turtle protections.

She joined experts from the group on a trip to the Virgin Islands to witness the turtles' hatching and moving to the sea.

[42] During the 2016 election, Walsh was a supporter of Hillary Clinton, publicly endorsing her and campaigning for her several times in California, Arizona, New Hampshire, and Virginia.