While pursuing a master's degree in sociology from the University of Mumbai, she made several unsuccessful attempts to start a career in film, and featured in television commercials and music videos.

Following a downturn, Vidya made a career comeback by playing cheerful women balancing work and family life in Tumhari Sulu (2017) and Mission Mangal (2019).

After starring in the Amazon Prime Video films Shakuntala Devi (2020), Sherni (2021), and Jalsa (2022), Vidya had her highest-grossing release in the comedy horror sequel Bhool Bhulaiyaa 3 (2024).

[14][15] After the series ended, Vidya refused director Anurag Basu's offer to star in a television soap opera, as she wanted to concentrate on a film career.

[23][24] After failing to start a film career, Vidya appeared in approximately 60 television commercials and in music videos for Euphoria and Shubha Mudgal; a majority of these were directed by Pradeep Sarkar.

The film's producer Vidhu Vinod Chopra initially preferred an established actress in the part, but agreed to cast Vidya after she underwent six months of extensive tests.

[19][29][30] Based on Sarat Chandra Chattopadhyay's 1914 Bengali novel of the same name, Parineeta tells the love story between Shekhar (played by Saif Ali Khan), the son of the local zamindar, and Lalita (Vidya), the dignified daughter of the family's tenant.

[31] Vidya's performance received praise from critics;[15] Derek Elley of Variety found her to be an "acting revelation", adding that her "devoted but dignified Lalita is the picture's heart and soul".

[33] Continuing her collaboration with Chopra's company, Vidya starred opposite Sanjay Dutt in Rajkumar Hirani's comedy film Lage Raho Munna Bhai (2006).

[34] While she acknowledged not having a substantial role in the film, she agreed to the project as part of a conscious effort to work in different genres to avoid being typecast in her Parineeta image.

Played by Shobana in the original, Vidya was challenged by the role of a woman suffering from dissociative identity disorder; in preparation, she stayed in isolation for three days and once collapsed on set.

[33] In 2008's Halla Bol, based on the life of activist Safdar Hashmi, Vidya played a supporting role opposite Ajay Devgn.

[50] Elvis D'Silva of Rediff.com found Vidya to be "woefully miscast" and criticised her look and wardrobe, as did Shubhra Gupta of The Indian Express, who dismissed her as "determinedly frumpy".

[57] Comparing her acting style to that of Dimple Kapadia, the critic Sukanya Verma wrote, "Balan is poignant yet restrained and projects an impressive figure of grace and integrity";[58] Nikhat Kazmi of The Times of India commended her for lending a "rare dignity to the image of the Bollywood mom".

[72] Sudhish Kamath of The Hindu took note of Vidya's ability to be "in sublime control over her emotions"[73] and Savera Someshwar of Rediff.com added that "her hesitant body language, her faith, her helplessness, her rage, her sorrow and her gratitude all come across beautifully".

[76][77] The New York Times reported that with her role in The Dirty Picture (2011), a drama based on the controversial Indian actress Silk Smitha, Vidya had "redefine[d] the Hindi film heroine".

[78] She was challenged by the overwhelming sexuality in the role, and spoke of the mental preparation she put into achieving a balance between the character's mix of innocence, vulnerability, and sex appeal.

[93][94] Playing a boisterous Punjabi woman opposite Emraan Hashmi, she explained that unlike her previous few films, her part in it was secondary to the male star.

[106] The following year, she took on the supporting part of a police officer in Te3n (2016), a thriller inspired by the 2013 South Korean film Montage, co-starring Amitabh Bachchan and Nawazuddin Siddiqui.

[111] In a mixed review of the film, Raja Sen of Rediff.com wrote that "with tremendous commitment to the part, [Vidya] gives us a stirring performance free of vanity or obviousness".

[112] In Srijit Mukherji's period drama Begum Jaan (2017), a remake of the filmmaker's own Bengali film Rajkahini (2015), Vidya played the title role of a procurer from the 1940s.

[113] She worked with Mukherji to provide a backstory to her character and researched the era by reading The Other Side of Silence; filming in the barren landscape of rural Jharkhand was physically daunting for her.

[121][122] Vidya expanded into South Indian cinema in 2019, with roles in the two-part Telugu biopic, N.T.R: Kathanayakudu and N.T.R: Mahanayakudu, and the Tamil drama Nerkonda Paarvai.

[136] She then portrayed the mental calculator Shakuntala Devi in an eponymous biopic, which due to the COVID-19 pandemic could not release theatrically and instead streamed on Amazon Prime Video.

[139] Mike McCahill of The Guardian praised Vidya's "all-shotguns-blazing performance" and The Hindu's Kenneth Rosario took note of her "ability to smoothly transition between age and appearances, but even she can't salvage a rather mawkish finale to the film".

[148] Vidya led an ensemble cast in Anu Menon's murder mystery Neeyat (2023), which marked her first film to receive a theatrical release since Mission Mangal in 2019.

Several publications listed her as the "worst dressed actress" and her costume designers attributed her failure to carry off western clothes due to her weight and body structure.

[191][192][193] She was later praised in the media for wearing saris at public events; designer Niharika Khan explained, "Vidya's beauty lies in her curves.

[195][196] The major commercial success of the latter two earned her the title of a "female hero"[67][197] and Kalpana Nair of Firstpost noted that with these two films Vidya spearheaded a change in the roles that were offered to actresses over 30.

[204] In 2012, the magazine Verve featured her as one of India's "Young Power Women" and wrote, "In a reel world peopled by size zero-toned bodies and pretty-as-a-picture heroines, Vidya comes across as completely real and natural – a woman who has followed her own instincts and dared to live her destiny by being her own person and not morphing herself to fit into any conventional slot.