Paluzzi's very first film was an uncredited walk-on part in Three Coins in the Fountain (1954). She went on to appear in many movies, most of which were made in her native Italy. In her early films, she is credited as Luciana Paoluzzi. She also played Rafaella, the wife of Brett Halsey's character, Ted Carter, in 1961's Return to Peyton Place

In 1959–60, Paluzzi appeared with David Hedison in the short-lived espionage television series, Five Fingers. In 1962 she played a murderous wife in an episode of Thriller titled "Flowers of Evil". In 1964 she played the villainess in an episode of The Man from U.N.C.L.E., as the seductive THRUSH agent Angela in the first-season episode "The Four Steps Affair" and in the movie version of the show's pilot episode, To Trap a Spy. In 1966 she played Baroness Carla Montaglia in Season 3, Episode 3 "Face of a Shadow" in Twelve O'Clock High . In 1967 she played the seductive foreign agent Marla Valemska in "Matchless," the premier episode of Mr. Teriffic. In 1971 Paluzzi appeared as a special guest star in "Powderkeg," the pilot movie for the CBS TV series, Bearcats!. In 1978 she portrayed Journalist Liana Labella in the Hawaii Five-O episode "My Friend, the Enemy".

During the 1960s and 1970s, Paluzzi had a long-term relationship with Tony Anthony, with whom she appeared with in the films Wounds of Hunger and Come Together. Her work in Japan on The Green Slime inspired Anthony to write and produce the Hybrid Spaghetti Western-jidaigeki film The Silent Stranger.

Paluzzi appeared in such films as Muscle Beach Party (1964) and Chuka (1967). She co-starred in the 1969 women in prison film 99 Women; and as a southern belle in the 1974 Hollywood drama The Klansman (with her voice dubbed by American Actress Joanna Moore).

Paluzzi is best known as the villainess, Fiona Volpe, in Thunderball (1965). She had auditioned for the part of the lead Bond girl, Dominetta "Domino" Petacchi, but producers cast Claudine Auger, changing the Domino character from an Italian to a Frenchwoman and renaming her Dominique Derval. Initially crestfallen when informed she did not get the part, Paluzzi rejoiced when told her consolatory prize was the part of Volpe, which she said was "more fun to play". Paluzzi later claimed being a Bond girl was a double-edged sword. In the documentary Bond Girls Are Forever, Paluzzi expressed amazement at the level of fame, publicity, and recognition she received from Thunderball; but as a result of being in such an outlandish film, she felt she was taken less seriously as an Actress when returning to the Italian film industry.

In 1980, Luciana Paluzzi married her current husband, American media mogul Michael Jay Solomon, a former President of Warner Bros International Television. The two resided at an exclusive clifftop estate overlooking the Pacific Ocean in Jalisco, Mexico, known as "Casa Dos Estrellas". The couple sold that estate in about 2005 to live in New York and Rome, to be close to family.