In 2002, Rao played her first leading role as Anjali Thapar in Raj Kanwar's fantasy thriller Ab Ke Baras. Film critic Planet Bollywood wrote, "Amrita Rao comes out the real winner, with her dancing skills, innocent looks and decent acting skills". In May 2003, Rao starred with Shahid Kapoor in the coming-of-age romance film Ishq Vishk as a college student. Rao's portrayal earned her several awards, including Filmfare Best Female Debut Award (2003) and IIFA Award for Star Debut of the Year, (2004).

In 2004, Rao starred in Indra Kumar's adult comedy Masti, opposite Vivek Oberoi. The film received positive responses from critics, and was a financial success at the box office. Her performance as Anchal, who is obsessively possessive about her husband, was also received positively.

Rao co-starred alongside Shahid Kapoor and Sanjay Dutt in the 2005 drama Vaah! Life Ho Toh Aisi!. Critical response towards the film was negative, although Rao garnered acclaim for her performance of a school Teacher. Glamsham said the only thing that made the film watchable was the acting of Amrita Rao. That same year, Rao took the lead role in the John Matthew Matthan drama Shikhar, in which she portrayed Madhvi. She then appeared in the 2006 low-budget comedy Pyare Mohan opposite Vivek Oberoi The movie was not well received by critics; Rajeev Masand wrote, "Amrita hit career lows, producing the low-fashion chemistry".

Although highly regarded for her acting abilities, Rao's films to date had often not appealed to a wide audience. Vivah (2006) made her a national star; it depicted the journey of two individuals from engagement to marriage. Co-starring alongside Shahid Kapoor, Rao portrayed Poonam, a traditionally raised young woman. The film was given mixed reviews by most critics but became one of the highest-grossing films of the year, as well as Rao's biggest commercial success to date. Taran Adarsh wrote, "Amrita Rao gets a new lease of life with Vivah. She looks the character and is splendid all through." At the 13th Star Screen Award, Rao received a Best Actress nomination.

Rao was cast alongside Mahesh Babu in the 2007 Telugu action film Athidhi. The film was directed and co-written by Surender Reddy. She played the girlfriend of Mahesh's character. She received mostly positive reviews, with critics praising the chemistry between Rao and Mahesh Babu. Rediff noted, "Amrita Rao, who makes her debut in Telugu films, makes a mark." Other critics, such as Sify wrote that, "Amrita Rao is not only beautiful but also glamorous. She has proved that she could be yet another native girl for Tollywood. She emoted well with convincing histrionics fit for Telugu screen."

In 2008, Rao appeared in her third blockbuster, Shyam Benegal's comedy film Welcome to Sajjanpur. She played the role of Kamala, a woman who is desperate for communication from her husband Bansiram (Kunal Kapoor), a labourer at a dockyard in Mumbai. The film tells the story of several villagers, including a child widow, an abandoned wife, a harried mother, a corrupt neta, a romantic compounder and their serious and mischievous problems. The film received positive reviews and earned ₹20 million (US$310,000), making it the second-highest-grossing film in Rao's career. Hindustan Times noted, "Amrita Rao is sweetness personified." She received a Stardust Best Actress Award for her performance.

Rao's only film of 2011 was Love U...Mr. Kalakaar! and her second movie under Rajshri Productions. She was generally praised for her physical performance, but the movie generated mostly negative reviews and became a commercial failure. Nikhat Kazmi of the Times of India wrote, "Amrita Rao at best, but the film is so predictable and so long, it loses impact." Rao has also made special appearances in Heyy Babyy (2007), Life Partner (2007) and Jaane Kahan Se Aayi Hai (2010).

Rao co-starred alongside Sunny Deol in the action film Singh Saab the Great (2013), which was directed by Anil Sharma. Rao portrays a Journalist Shikha Chaturvedi. The film was controversial and ran into trouble with the SGPC, which objected to its title. The film was largely panned by critics but Rao's performance earned positive reviews. Namrta Joshi of Outlook said, "Amrita Rao plays a role that definitely feels like something she has already done, all the emotional support". The film received predominately negative reviews but was a moderate box-office success with revenues of ₹29 crore (US$4.4 million).

Rao was born in Mumbai. Her father Deepak Rao owns an advertising agency. Her younger sister Preetika Rao is a model and a southern film actor. Rao attended school at Canossa Convent Girls School and graduated from Sophia College with a psychology degree. Rao describes her family as a "very conservative family—a traditional, Hindu, Indian family" and herself as very liberal. Her native language is Konkani; she also speaks Marathi, English and Hindi.

She married her boyfriend, Anmol, a Radio Jockey after 7 years of dating on 15 May 2016 in Mumbai.