Having had walk-on roles on her mother's television series The Lucy Show, Arnaz made her acting debut in a continuing role in the series Here's Lucy from 1968 to 1974. She played Kim Carter, the daughter of the eponymous Lucy—who was played by Arnaz's real-life mother, Lucille Ball.

Arnaz branched out into television roles independent of her family from the mid-1970s. In 1975, she played murder victim Elizabeth Short in an NBC telefilm of Who is the Black Dahlia?, and she starred with Lyle Waggoner and Tommy Tune in Welcome to the "World", The Wonderful World of Disney special commemorating the grand opening of Space Mountain at Walt Disney World in Orlando, Florida. In 1978, she appeared in an episode of Fantasy Island as a woman desperately trying to save her marriage. She has continued to make appearances in a number of popular television series over the years, including Murder, She Wrote, Marcus Welby, M.D., Sons and Daughters (CBS, 1991), and Law & Order.

She has also had a lengthy career in musical theatre. In the summer of 1978, she played the title role in Annie Get Your Gun at the Jones Beach Theatre on Long Island, New York. This was the first production at Jones Beach Theatre after the death of longtime Producer Guy Lombardo. She made her Broadway debut in February 1979 in the musical They're Playing Our Song. Arnaz won the Theatre World Award and the Los Angeles Drama Critics Circle Award for Best Actress in a Musical for her portrayal of Sonia Walsk. In 1986, she won the Sarah Siddons Award for her tour with Tommy Tune in the international company of the musical My One and Only.

She has been twice married, to actor Phil Vandervort (1971) and actor-writer Laurence Luckinbill (June 22, 1980 – present). Luckinbill and Arnaz live in Palm Springs, California.

Arnaz also had a short-lived series of her own, The Lucie Arnaz Show, on CBS in 1985. The reviewer for The New York Times described the show as "the always ingratiating Miss Arnaz as a Psychologist who not only writes an advice column, but also takes calls from listeners on her own radio program."

She won an Emmy Award for Outstanding Informational Special, in 1993 for her documentary about her parents, Lucy and Desi: A Home Movie.

Arnaz was a Trustee on the Board of The American Theatre Wing for 15 years (1999-2014). From about 2002 to 2007, Arnaz was the President of the board of Directors of the Lucille Ball-Desi Arnaz Center in Jamestown, New York. She resigned over a dispute with the executive Director over the Future direction of the Center.

She has numerous other theater credits, both in the United States and abroad: Seesaw (first national company, 1974), Whose Life Is It Anyway?, The Guardsman (Paper Mill Playhouse, Millburn, New Jersey, January 1984), The Wizard of Oz in Concert: Dreams Come True (Concert at Lincoln Center, 1995, televised), Sonia Flew (Coconut Grove Playhouse, Florida, April 2006), The Witches of Eastwick (London, Theatre Royal, Drury Lane, June 2000), Vanities (Mark Taper Forum, Los Angeles, 1976 as "Kathy"), Neil Simon's Lost in Yonkers (Broadway), Dirty Rotten Scoundrels (Broadway, May 23, 2006 to September 3, 2006 and Terence McNally's Master Class (Seacoast Repertory Theatre, Portsmouth, New Hampshire, April to May 1999).

In October 2008, Arnaz and longtime family friend, Hollywood columnist and Turner Classic Movies host Robert Osborne participated in a tribute to Arnaz's mother, Lucille Ball, at the Paley Center For Media in New York City. The program, "Lucie and Lucy: Lucie Arnaz Shares Treasures From The Family Video Collection", included a discussion between Osborne and Arnaz about Ball, and also focused on Ball's last long-running series, Here's Lucy (which was celebrating its 40th anniversary), as well as several of Ball's television specials and guest appearances during the 1970s, which Arnaz had recently donated to the Paley Center for Media.

In 2010, Arnaz performed in (along with Raúl Esparza and Valarie Pettiford) and directed Babalu: A Celebration of the Music of Desi Arnaz and his Orchestra. A Miami, Florida performance was given in July 2010.

Comedians who performed at the 2012 Festival of New Comedy included Billy Gardell, Paula Poundstone and Tammy Pescatelli.

She toured in Pippin in 2014, playing the role of Berthe, the title character's grandmother. She appeared on Broadway in Pippin, from October 9, 2014 to November 9, 2014.