Holofcener was born to a secular Jewish family in New York City, the younger of two daughters of Artist Lawrence Holofcener and set decorator Carol Holofcener. Her elder sister is Suzanne Holofcener. Nicole's parents divorced when she was one year old. When she was eight, her mother married film Producer Charles H. Joffe, who moved the family to Hollywood. Since her stepfather produced Woody Allen's films, Holofcener spent enough time on Allen's sets to be an extra in Take the Money and Run and Sleeper. Joffe was responsible for Holofcener's first "real" job in the movie industry: a production assistant on Woody Allen's A Midsummer Night's Sex Comedy in 1982. She moved up to apprentice Editor for Hannah and Her Sisters (1986).

She followed in 2001 with her second feature, Lovely and Amazing. Featuring performances by Catherine Keener, Brenda Blethyn, Emily Mortimer and newcomer Raven Goodwin, the film was not only critically acclaimed but did well at the box office.

After directing two episodes of the series Six Feet Under, Holofcener began work on her third film, Friends with Money, which featured Jennifer Aniston, Joan Cusack, Frances McDormand and Catherine Keener. The film opened the 2006 Sundance Film Festival and its screenplay was nominated for the 2006 Independent Spirit Award, while Frances McDormand won the award for Best Supporting Female. The film received a limited release on April 7, 2006.

Holofcener's first experiences with film as a child left her either frightened or sad; she recalled her fright at Jerry Lewis's The Nutty Professor. Returning east to college, Holofcener originally wanted to become an Artist like her father, but felt she wasn't as talented as others in her classes. From there she gravitated into taking some film courses. She studied film at Columbia University, and made two shorts titled Angry and It's Richard I Love. While at Columbia, she was taught by Martin Scorsese. After viewing one of her college works, her stepfather wondered aloud if she shouldn't make a career change. Disappointed, she became a clerk at a video store for a while, then entered Columbia's graduate school program. At the time of his death in 2008, Charles Joffe had become one of the most ardent fans of his stepdaughter's work. Angry received critical praise at the Sundance Film Festival. Holofcener has been viewed as an indie filmmaker despite the financial and critical success of her feature-length films.The films Holofcener has worked on are highly regarded as indie films. The Common theme of realism is integrated into the conventions of independent films as well. Many of Holofcener's films are shot on location during their production. Today, Holofcener is often referred to as the female Woody Allen and she has gone on to direct several feature-length films.

Holofcener's fourth feature film, Please Give, premiered at the Sundance Film Festival and was screened at the Berlin International Film Festival and the Tribeca Film Festival. The film also won Holofcener the Robert Altman Award. The film also gained Holofcener a nomination with the Writers Guild of America Awards for Best Original Screenplay. It stars Keener in the duo's fourth collaboration and was released in 2010. The film also features Oliver Platt, Rebecca Hall, Amanda Peet and Sarah Steele.

Holofcener followed up with Enough Said starring Julia Louis-Dreyfus, James Gandolfini, and Catherine Keener. The film premiered at the 2013 Toronto International Film Festival. The romantic comedy follows the character Eva, who is a recent divorcée. Eva falls in love unexpectedly and discovers her new love interest is the ex-husband of her friend. To date, Enough Said is Holofcener's most financially successful film. The film was officially released on September 20, 2013, a few months after Gandolfini's death.

In 2015, it was announced that Holofcener was working on an adaptation of Lee Israel's memoir with Julianne Moore in consideration for the lead role. However, later that year Moore left the project due to creative differences. Producer Anne Carey and actor Chris O'Dowd had been attached to the project, which was set to be released by Fox Searchlight. The film is currently in production with Marielle Heller directing from Holofcener's script.