Teri Lynn Hatcher was born on December 8, 1964 in Palo Alto, California, the only child of Esther (née Beshur), a computer programmer who worked for Lockheed Martin, and Owen Walker Hatcher, Jr., a nuclear Physicist and electrical Engineer. Her father is of English, Welsh and Irish descent (Hatcher has said that he also has Choctaw ancestry); her mother is of half Syrian and half Czech and Irish ancestry.

Hatcher studied acting at the American Conservatory Theater. One of her early jobs (in 1984) was as an NFL Cheerleader with the San Francisco 49ers. From September 1985 to May 1986 she joined the cast of the TV series The Love Boat, playing the role of "Amy", one of the "Mermaid" showgirls. From 1986 to 1989, she appeared in the recurring role of "Penny Parker" opposite Richard Dean Anderson's eponymous hero on the TV series MacGyver. In 1987, she played the daughter of Patty Duke's lead character in the short-lived Fox comedy Karen's Song. In 1988, she made a guest appearance in Star Trek: The Next Generation as Lt. Robinson. In 1989, she guest-starred in an episode of Quantum Leap titled "Star Crossed".

Hatcher married Marcus Leithold, of Butler, Pennsylvania on June 4, 1988; they divorced the following year. On May 27, 1994, she married actor Jon Tenney; they had a daughter, Emerson Rose, on November 10, 1997, and divorced in March 2003. In 2007, Hatcher began writing a column for Glamour magazine.

Hatcher's next TV series role, in 1991, was in the Norman Lear creation Sunday Dinner. She portrayed a 30-year-old Lawyer in a relationship with a widowed businessman twice her age, played by Robert Loggia. The series had a brief run on CBS that summer but was not renewed. In 1992, Hatcher tried out for the role of Jamie Buchman on Mad About You and made it to the final two choices, but lost the part to Helen Hunt.

Hatcher made a much-discussed guest appearance on a 1993 episode of Seinfeld, in which her character, Sidra, breaks up with Jerry because she believes that Jerry was trying to have Elaine surreptitiously determine whether Sidra had breast implants. (Her parting words to Jerry: "They're real... and they're spectacular.") She returned to play Sidra in two subsequent episodes, "The Pilot", and "The Finale (Part 2)".

Hatcher hosted NBC's Saturday Night Live in 1996. She beat four other actresses for one of the lead roles on ABC's Desperate Housewives, in which she starred as Susan Mayer, a role for which she won the Best Actress in a Musical or Comedy Golden Globe Award in January 2005. In 2005, Hatcher won the Screen Actors Guild (SAG) award in the same category. In July 2005, she was nominated for an Emmy award as Outstanding Lead Actress in a Comedy Series, along with co-stars Marcia Cross and Felicity Huffman.

Hatcher won the role of Paris Carver (beating Monica Bellucci) in the 1997 James Bond film Tomorrow Never Dies. Hatcher was three months pregnant at the filming's start, by her then husband, Jon Tenney. A publicist said the pregnancy did not affect the production schedule. She was voted the world's sexiest woman by readers of popular men's magazine FHM in the same year. Hatcher also appeared in films such as Spy Kids (2001), Dead in the Water (1991), 2 Days in the Valley (1996) and The Cool Surface (1994). She co-starred with Alec Baldwin in Heaven's Prisoners (1996), which failed at the box office.

As of April 2006, Hatcher was one of the highest paid television actresses in the United States. She reportedly earned $285,000 per episode of Desperate Housewives. In May 2006, she released her first book, Burnt Toast: And Other Philosophies of Life. Hatcher performed The Beatles song "Good Night" on the 2006 charity album Unexpected Dreams – Songs From the Stars. On April 9, 2008, Hatcher appeared on Idol Gives Back, singing Carrie Underwood's "Before He Cheats". She also appeared in the 2009 hit film Coraline. She voiced the Other Mother, a mysterious, button-eyed figure, as well as Coraline's mother Mel Jones, who constantly shows Coraline "tough love". The film received critical acclaim.

On September 13, 2009, she finished the Malibu Triathlon (0.5 mi or 0.80 km ocean swim, 18 mi or 29 km out-and-back bike course, and 4 mi or 6.4 km out-and-back run course) in 2 h 6 min 50.7 s. She returned to the event in 2010 to complete only the swim portion as a fundraiser.

A report in November 2010 suggested that Hatcher, along with co-star Felicity Huffman, would be quitting Desperate Housewives, but ABC denied the claim. Hatcher later addressed the rumors of her departure from Desperate Housewives, saying that "[t]here are not enough adjectives to describe how stupid, off base, and ridiculously untrue this is". However, after the show concluded in 2012, media sources revealed an apparent rift with her co-stars. It has been widely speculated that the cast did not get along well with Hatcher. Eva Longoria, Felicity Huffman, Marcia Cross, and Vanessa Williams gave thank-you gifts to the crew from the show which included a message with their names inscribed at the end, and Hatcher's name was distinctly absent. TV Guide source, william Keck, revealed that "something went down" between Hatcher and the cast that caused a split and also observed how Hatcher would physically distance herself from the others during breaks in filming. On her end, Hatcher said to TV Guide that "I will never disclose the true and complicated journey of us all, but I wish everyone on the show well." Longoria denied any animosity saying to David Letterman, "we all get along." Remarkably, a friend of Longoria's revealed, to another media source, that Hatcher "excluded herself from the rest of the cast from day one", and that she chose to end it all on a sad note, saying that "doing the last press they will ever do for the show, the ladies stood united and were shocked when Teri simply didn't show up".

In 2011, Men's Health magazine named Hatcher #38 on their "Hottest Women of All Time" list. Hatcher voiced Dottie in the Disney film Planes (2013) and Planes: Fire & Rescue (2014). In 2016, Hatcher had a recurring role as Charlotte, a successful single mother who becomes Oscar's (Matthew Perry) love interest in the second season of the comedy series The Odd Couple. In 2017, Hatcher appeared as Queen Rhea of Daxam in a recurring role on the CW series Supergirl.