Delaney, an Irish American, was born on November 29, 1961, in Philadelphia, Pennsylvania, the daughter of Joan and Jack Delaney. Delaney's mother was a homemaker and her father a union official and former head of the United Auto Workers. She was raised Roman Catholic. Delaney grew up in Roxborough and has four brothers: Ed, John, Keith, and Patrick. While she was attending J. W. Hallahan Catholic Girls High School, she worked as a model for the Elite agency. After her graduation, she went to New York and found employment there as a model. At the same time, she studied acting with william Esper.

Delaney first became known for her stint as innocent teenager Jenny Gardner Nelson on the soap opera All My Children, which also was her first job. She played the character from August 1981 to August 1984, earning a Daytime Emmy Award nomination, as well as a loyal fan base; a profile of the Actress a decade later noted, "Delaney left the soap in 1984, but fans still remember her as Jenny. 'They come up and will say they've followed everything I've done, and they stopped watching the show after I left, and they're so happy to see me on NYPD Blue, because they love the character.'"

Delaney has been married twice. Her first marriage to actor Charles Grant lasted from 1984 to 1988. Her second marriage was to actor Joseph Cortese. They married in 1989 and divorced in 1994. Delaney and Cortese had a son named Jack who was born in 1990. She was engaged to Producer Alan Barnette from 1997 to 2006. She has dogs named Penny (a Dachshund) and Sydney (a half-Corgi mix).

After leaving the show, Delaney began acting in feature films. In 1985, she appeared with Emilio Estevez in That Was Then... This Is Now, a film version of the S. E. Hinton novel of the same name. In 1986, she played a young nun in the military action movie The Delta Force, starring Chuck Norris. In 1987, Delaney was cast as Amanda Jones in Some Kind of Wonderful opposite Peter Gallagher, but new Director Howard Deutch recast both roles with Lea Thompson and Craig Sheffer before filming. Also in 1987, she appeared both as Jessie in Christmas Comes to Willow Creek, and as associate attorney Leslie Kleinberg during the 2nd season of L.A. Law. In 1988, Delaney starred in the thriller The Drifter. In 1994, she appeared in the film The Force.

In 1988, Delaney became a regular on the CBS television series Tour of Duty. After leaving the show in 1989 to give birth to her and husband Joseph Cortese's son, her character was killed in an explosion just as her All My Children character had died five years earlier. In the years immediately following her departure from her two early television series, her film and TV roles tended to be few and of low quality, in the opinion of both the critics and the Actress herself. A 1996 profile article in Entertainment Weekly, on the occasion of her landing a prestigious television role at the end of this period, noted: "Delaney's résumé is spotted with ridiculous roles that range from a nun in the Chuck Norris action movie, The Delta Force, to a possessed nymphomaniac in the soft-core horror film, Temptress. 'There's a lot of things I did to pay the mortgage,' Delaney says resignedly." Roles from this period include her 1992 appearance as Lucky Santangelo in the television miniseries, Lady Boss.

In 1995, Delaney began portraying the role of NYPD Blue Detective Diane Russell. Originally slated for only four episodes, the role became permanent after her character's relationship with Detective Bobby Simone (Jimmy Smits) became a hit with viewers. In this role, she won her first Emmy Award as Best Supporting Actress in a Drama and was also nominated for two other Emmy Awards. After Smits left NYPD Blue, Producer Steven Bochco chose Delaney for the lead in the new television series Philly. Despite critical acclaim, the show lasted only one season.

In 2002, Delaney was arrested in Malibu, California, for suspicion of drunk driving after she refused to take a breathalyzer test. She subsequently pleaded no contest and was sentenced to two-years probation, fined, and ordered to take a defensive driving course.

After briefly returning in 4 episodes of NYPD Blue, Delaney starred in the 2004 NBC miniseries 10.5, and its 2006 sequel, 10.5: Apocalypse. The following year, she began a recurring role on The O.C. In 2006, Delaney starred with Steven Weber in an episode of Nightmares and Dreamscapes: From the Stories of Stephen King titled "You Know They Got a Hell of a Band," about Rock and Roll Heaven. Delaney next appeared twice on Law & Order: Special Victims Unit in early 2007, guest-starring on the episodes "Philadelphia" and "Florida."

Delaney was selected as a speaker at the presentation of the National Constitution Center's Liberty Medal to Robert Gates in 2011. After delivering a rambling and disjointed speech in which she discussed being a member of a military family, she was escorted off stage. The slurred delivery and often incomprehensible speech fueled reports that she was under the influence of alcohol or other drugs at the time of the speech.

Delaney played the main role of Claudia Joy Holden on the Lifetime Television series Army Wives. In November 2012, it was announced that Delaney would not be returning for the show's seventh season, as her character was killed off.