She was born Natasha Abigail Taylor in Walton-on-Thames, Surrey in 1969 to Noreen McElhone and Michael Taylor, both journalists. She took her mother's maiden name as her stage name. McElhone has a scriptwriter brother, Damon, who lives in Los Angeles, and two half-brothers, Alexander, who lives in Zürich, and Nicholas, who lives in Stockholm. Her parents separated when she was two. Her Irish mother moved the family to Brighton and later married Journalist and columnist Roy Greenslade.

McElhone began her career in the theatre, including starring roles in Richard III and A Midsummer Night's Dream at the Open Air Theatre, Regent's Park, London, and in The Count of Monte Cristo and The Cherry Orchard at the Haymarket Theatre, Leicester. She made her television debut in the BBC's Bergerac in 1991 (credited on screen as Natascha Taylor), and was seen in an episode of Absolutely Fabulous in 1992.

McElhone was seen in the Dennis Potter TV mini-series Karaoke. Her first major box office role came in 1996 with Surviving Picasso, which required a full frontal scene with co-star Anthony Hopkins. One of her most successful films to date has been 1998's The Truman Show with Jim Carrey. She had leading roles opposite Brad Pitt in The Devil's Own, Robert De Niro in Ronin and George Clooney in Solaris.

McElhone married plastic surgeon Dr Martin Hirigoyen Kelly on 19 May 1998. The couple lived in Fulham, west London, with their sons Theodore (born 2000) and Otis (born May 2003); their third son, Rex, was born in October 2008, five months after Kelly's death.

In 2005, she co-starred in the NBC miniseries Revelations with actor Bill Pullman. She starred in a 2006 West End production of Honour at the Wyndham's Theatre alongside Diana Rigg and Martin Jarvis. She then accepted a leading role in the Showtime cable television series Californication as Karen, alongside David Duchovny. McElhone is the newest Neutrogena spokeswoman and the face of the Ageless Essentials Continuous Hydration line. In 2010 she was the voice of Marie in the video game Castlevania: Lords of Shadow from Konami.

On 20 May 2008, 43-year-old Kelly was found slumped in the doorway of his family's home by a fellow Doctor, who had him rushed to Chelsea and Westminster Hospital (where he worked). However, he could not be revived. He died one day after his 10th wedding anniversary. A post-mortem exam revealed the cause of death to have been dilated cardiomyopathy.

After her husband's sudden death, McElhone continued to write letters to him, sometimes documenting the daily trivia of life but also dealing with how she and their young children were coping with their loss. These letters and diary entries formed the basis of her book After You: Letters of Love, and Loss, to a Husband and Father. The book was published in July 2010. (The book is simply titled After You in the Kindle edition-UK version only.)

McElhone co-starred in a 2013 adaptation of Romeo and Juliet, as Juliet's mother, Lady Capulet, alongside Hailee Steinfeld and Damian Lewis. In 2014, she played the role of Alex Forrest in Fatal Attraction, at the Theatre Royal Haymarket. In 2015, McElhone starred as Sarah Churchill in the Royal Shakespeare Company's production of Helen Edmundson's Queen Anne.

In February 2016, she was cast alongside Kiefer Sutherland in ABC's political drama Designated Survivor, which premiered in September 2016.. Her character, U.S. First Lady Alexandra "Alex" Kirkman, was killed off in the second season to allow McElhone to take a role in the upcoming series The First.