She made her international breakthrough in the role of a free-spirited artist in The Unbearable Lightness of Being (1988), which earned her a nomination for the Golden Globe Award for Best Supporting Actress – Motion Picture.

Her other film roles include The Adventures of Picasso (1978), Havana (1990), Romeo Is Bleeding (1993), Mr. Jones (1993), The Ninth Gate (1999), Queen of the Damned (2002), Casanova (2005), The Reader (2008), Remember Me (2010), Maya Dardel (2017), and The Artist's Wife (2019).

On television, Olin starred as KGB agent Irina Derevko on the spy thriller Alias (2002–2006), which earned her a nomination for the Primetime Emmy Award for Outstanding Supporting Actress in a Drama Series.

Critically acclaimed stage performances by Olin at Sweden's Royal Dramatic Theatre included the leading part as The Daughter in A Dream Play by Strindberg; Margarita in the stage adaptation of The Master and Margarita by Mikhail Bulgakov; Carlo Goldoni's The Servant of Two Masters; Ann in Edward Bond's Summer; Titania in A Midsummer Night's Dream by Shakespeare; Ben Jonson's The Alchemist; the title role in Ingmar Bergman's rendition of Strindberg's Miss Julie, and the neurotic Charlotte in the contemporary drama Nattvarden (The Last Supper) by Lars Norén.

[citation needed] In 1989, Olin was nominated for the Academy Award for Best Supporting Actress, for her work in Enemies: A Love Story, in which she portrayed the survivor of a Nazi death camp.

[7] Olin and director Lasse Hallström collaborated on the film Chocolat (2000),[7] which received five Academy Award nominations, and worked together again on Casanova (2005)[citation needed] (and later in the 2024 TV series The Darkness).

[citation needed] In 2008, Olin appeared in the Oscar-nominated film The Reader, playing a Jewish survivor of the Auschwitz death march at a trial in the 1960s, and as the woman's daughter twenty years later.