Beatrice Whitney Straight was born in Old Westbury, New York, the daughter of Dorothy Payne Whitney, of the Whitney family, and Willard Dickerman Straight, an investment banker, diplomat, and career U.S. Army officer. Her maternal grandfather was political leader and financier william Collins Whitney. In 1918, when Straight was four years old, her father died in France of influenza during the great epidemic while serving with the US Army during World War I. Following her mother's remarriage to British agronomist Leonard K. Elmhirst in 1925, the family moved to Devon England. It was there that Straight was educated at Dartington Hall and began acting in amateur theater productions. In the 1930s, she attended the Cornish School in Seattle where many of her teachers at Dartington Hall were from and to which both she and her mother became major benefactors.

Straight returned to the United States and made her Broadway debut in 1939 in the play The Possessed. Most of her theater work was in the classics, including Twelfth Night (1941), Macbeth, and The Crucible (1953), for which she won the Tony Award for Best Featured Actress in a Play.

On February 22, 1942, Straight married Louis Dolivet, Free French Leader, in Polk County, Iowa. At the time, Dolivet was a speaker at the National Farm Institute and Straight was in the middle of the mid-west road show of Twelfth Night. Her mother, Dorothy Elmhirst and stepfather, Leonard K. Elmhirst attended the wedding, along with her brother Michael Straight and his wife, Belinda Crompton. Dolivet was in the French Air Force until June 1940 and was the co-editor of The Free World, a magazine published by the International Free World Association, of which he was secretary general. At the time of the wedding, her elder brother, Whitney Straight, had been missing since August 1941, when his plane was shot down on the French coast.

In 1948, while starring in the Broadway production of The Heiress, an adaptation of Henry James's Washington Square, she met Peter Cookson, who she was acting opposite. They married in 1949 and remained married until Cookson's death in 1990. Peter had two children from his previous marriage, Peter Cookson, Jr. and Jane Coopland (née Cookson). Together, Straight and Cookson had two children:

Straight obtained a divorce from Dolivet in Reno, Nevada on May 24, 1949. Together they had one child:

In 1952, her 7-year-old son, Willard, from her first marriage, accidentally drowned in a pond on their farm in Armonk while playing in a small row boat tied to the dock. The boy was found by Straight's second husband, Cookson. The boy's father, Dolivet, who was living in Paris at the time, was refused a visa and, therefore, unable to fly to the United States to attend the funeral, because of his alleged pro-communist activities, which he denied.

Straight worked infrequently in film and is perhaps remembered best for her role as a devastated wife confronting husband william Holden's infidelity in Network (1976). She won the Academy Award for Best Supporting Actress for her performance which, at five minutes and two seconds, remains the shortest ever to win an Oscar. Her most widely seen film appearance after Network was the role of the paranormal investigator Dr. Martha Lesh in the 1982 horror film Poltergeist.

Straight reportedly suffered from Alzheimer's disease in her last years. In 2001, she died from pneumonia in Northridge, Los Angeles, at the age of eighty-six. Her interment was at william Henry Lee Memorial Cemetery in New Marlborough, Massachusetts.