Zetterling appeared in film and television productions spanning six decades from the 1940s to the 1990s. Her breakthrough came in the 1944 film Torment written by Ingmar Bergman, in which she played a controversial role as a tormented shopgirl. Shortly afterwards she moved to England and gained instant success there with her title role in Basil Dearden's Frieda (1947) playing opposite David Farrar. After a brief return to Sweden in which she worked with Bergman again in his film Music in Darkness (1948), she returned to England and starred in a number of English films, playing against such leading men as Tyrone Power, Dirk Bogarde, Richard Widmark, Laurence Harvey, Peter Sellers, Herbert Lom, Richard Attenborough, Keenan Wynn, Stanley Baker, and Dennis Price.

Some of her notable films as an Actress include Quartet (1948), a film based on some of W. Somerset Maugham's short stories, The Romantic Age (1949) directed by Edmond T. Gréville, Only Two Can Play (1962) co-starring Peter Sellers and directed by Sidney Gilliat, and The Witches (1990), an adaptation of Roald Dahl's book directed by Nicolas Roeg. Having gained a reputation as a sex symbol in dramas and thrillers, she was equally effective in comedies, and also was very active in British television in the 50s and 60s.

She began directing in the early 1960s, starting with political documentaries and a short film called The War Game (1962), which was nominated for a BAFTA award, and won a Silver Lion at Venice. Her first feature film Älskande par (1964, "Loving Couples"), based on the novels of Agnes von Krusenstjerna, was banned at the Cannes Film Festival for its sexual explicitness and nudity. Kenneth Tynan of The Observer later called it "one of the most ambitious debuts since Citizen Kane." It was not the only film she made that would stir up controversy for its frank sexuality (early pioneer on voyeurism).

In her autobiography, All Those Tomorrows, published in 1985, Zetterling details love affairs with actor Herbert Lom and later Tyrone Power, with whom she lived from 1956 until early 1958. She was married to Norwegian actor Tutte Lemkow from 1944 to 1953. Lemkow and Zetterling had a daughter, Etienne and a son, Louis, who is professor of environmental sociology at the Autonomous University of Barcelona. From 1958 to 1976 she was married to British author David Hughes, who collaborated with her on her first films as Director. She died in London, from cancer on 17 March 1994, at the age of 68, a year after her final role on television. Recently released documents at the National Archives in London show that she, a member of the Hollywood Left, was watched by British security agents as a suspected Communist. However, the UK never had a system along the lines of the American Hollywood Blacklist. She died in her home.