D'Abo was born on 22 January 1969 in London, England, the daughter of Maggie London, an English model and Actress, and Mike d'Abo, an English singer and member of 1960s group Manfred Mann. She has an older brother, as well as two half-brothers and one half-sister: elder brother Ben, younger half-brother Bruno, and younger sibling twins Ella and Louis (born July 2007) on her father's side. Olivia and Ben both attended high school in the US at Los Feliz Hills School (formerly "The Apple School") in Los Angeles and d'Abo attended Pacoima Junior High School in Pacoima, California.

D'Abo's film debut was the supporting role of Princess Jehnna in Conan the Destroyer, released in June 1984. Two months later, she appeared in the supporting role of the peasant girl Paloma in Bolero (1984). She performed a full frontal nudity scene in Bolero (filmed April 1983) at the age of 14, standing in a tub while bathed by Bo Derek.

She is the first cousin once removed of her father's cousin Maryam d'Abo, the Actress best known for her performance as Kara Milovy in the 1987 James Bond film The Living Daylights. Olivia and Maryam bought a house together in Los Angeles when Olivia was 19.

D'Abo held the contract role of Karen Arnold in the ABC comedy-drama series The Wonder Years for the show's first four seasons, from 1988 to 1991, with two guest star appearances in the show's final two seasons. In 1992, she guest starred in the Star Trek: The Next Generation episode "True Q" as Amanda Rogers.

In animation, D'Abo is the voices of Sonya Blade in Mortal Kombat: Defenders of the Realm (1996); Melanie Walker/Ten in Batman Beyond (1999–2000); Star Sapphire in Justice League (2001); and Morgaine le Fey in Justice League Unlimited (2004); Tak in Invader Zim (2001–2002); Jane Porter in The Legend of Tarzan; Jedi Master Luminara Unduli in Star Wars: The Clone Wars (2008); Carol Ferris in Green Lantern: First FLIGHT (2009); and Natalia Romanoff in Ultimate Avengers and Ultimate Avengers 2: Rise of the Black Panther (both 2006).

D'Abo was engaged to actor Thomas Jane from 1998 to 2001. They worked in several projects together, including The Velocity of Gary and Jonni Nitro, of which Jane directed the last two episodes. She later married music Producer and Songwriter Patrick Leonard in August 2002. Leonard filed for divorce at Los Angeles County Superior Court in November 2012, citing irreconcilable differences, and revealing the couple had separated in August 2011. She has one child, Oliver, born in 1995. D'Abo also wrote and performed the title theme to Jonni Nitro. She was formerly engaged to the singer Julian Lennon.

D'Abo made five appearances recurring villain Nicole Wallace in the NBC police procedural drama series Law & Order: Criminal Intent between 2002 and 2008. She reprised the character in the 2013 episode "The Catacombes" of the French police procedural series Jo, a show created by René Balcer, who also created Criminal Intent.

D'Abo played Abby Carter, the ex-wife of Sheriff Jack Carter, in two 2007 episodes of the Sci-Fi Channel series Eureka. She has had numerous supporting roles in other television series and films, such as The Spirit of '76 (1990), Greedy (1994), The Big Green (1995) and The Twilight Zone (2002). On stage, she appeared in the 2005 Broadway production of The Odd Couple with Matthew Broderick and Nathan Lane.

D'Abo is a singer-songwriter, Guitarist and Pianist. She has composed and performed for various soundtracks. Her single "Broken" is from the movie Loving Annabelle. Her debut album Not TV was released in July 2008.

In February 2013, D'Abo began filming for Project Fedora (working title), a video game that combines live-action footage with 3D graphics.

In October 2015, d'Abo started a weekly podcast called Every Friday with Dan and Olivia co-hosting the show with Dan Miles of the Friends of Dan Music Podcast.

D'Abo appeared on Ken Reid's TV Guidance Counselor podcast on 8 July 2016.