Parker made her Broadway debut at the age of 11 in the 1976 revival of The Innocents, before going on to star in the title role of the Broadway musical Annie in 1979. She appeared in the 1984 films Footloose and Firstborn, and returned to Broadway in the 1989 play The Heidi Chronicles. Parker's other major film roles include L.A. Story (1991), Honeymoon in Vegas (1992), Hocus Pocus (1993), Ed Wood (1994), The First Wives Club (1996), The Family Stone (2005), Failure to Launch (2006), and Did You Hear About the Morgans? (2009).

Parker and four siblings appeared in a production of The Sound of Music at the outdoor Municipal Theatre (Muny) in St. Louis, Missouri. She was selected for a role in the new 1977–81 Broadway musical Annie: first in the small role of "July" and then succeeding Andrea McArdle and Shelley Bruce in the lead role of the Depression-era orphan, beginning March 1979. Parker held the role for a year. In 1982, Parker was cast as the co-lead of the CBS sitcom Square Pegs. The show lasted just one season, but Parker's performance, as a shy teen who showed hidden depths, was critically well received. In the three years that followed, she was cast in four films: the most significant being Footloose in 1984 and 1985's Girls Just Wanna Have Fun, co-starring Helen Hunt. In 1986, Parker appeared in Flight of the Navigator, a Disney science fiction film.

Parker was romantically involved with actor Robert Downey, Jr. from 1984 until 1991. They met on the set of Firstborn. Downey had a drug Problem, which affected their relationship. Parker has said, "I believed I was the person holding him together." She later briefly dated John F. Kennedy Jr..

In 1991, she appeared in a supporting role in the romantic comedy L.A. Story; both the movie and her performance garnered positive reviews. The following year, she landed a starring role in the well-received film Honeymoon in Vegas, co-starring Nicolas Cage. Her role of Sarah Sanderson in Disney's Halloween film Hocus Pocus was a higher grosser at the box office but received negative reviews. Also in 1993, she starred as a police diver opposite Bruce Willis in the film Striking Distance. The following year, she appeared opposite Johnny Depp in the critically acclaimed movie Ed Wood as Wood's girlfriend Dolores Fuller. The film Miami Rhapsody, in 1995, was a romantic comedy in which she had a leading role. In 1996, she appeared in another Tim Burton-directed movie, Mars Attacks!, as well as in The First Wives Club and The Substance of Fire, in which she reprised her 1991 stage role. In 1997, she appeared as Francesca Lanfield, a washed-up former child Actress, in the comedy 'Til There Was You.

On May 19, 1997, she married actor Matthew Broderick to whom she was introduced by one of her brothers at the Naked Angels theater company, where they both performed. The couple married in a civil ceremony in a historic synagogue on the Lower East Side in Manhattan. The couple's son, James Wilkie Broderick, was born in 2002. Parker and Broderick's twin daughters, Marion Loretta Elwell and Tabitha Hodge, were delivered via surrogate in June 2009. Their middle names of "Elwell" and "Hodge" are from Parker's mother's family, which she discovered while researching her ancestry for the first episode of Who Do You Think You Are? As of 2009, she lives in New York City with her husband and children.

She has received nine Golden Globe nominations, with four wins (all for Sex and the City) in 2000, 2001, 2002 & 2004.

Parker has received ten Emmy Award nominations, all for Sex and the City, winning Outstanding Comedy Series (as producer) in 2001 and Outstanding Lead Actress in a Comedy Series in 2004.

In early 2004, shortly after the last season of Sex and the City wrapped up, Parker signed a $38 million contract with the Gap. It was the first multi-season contract in the clothing company's history, in which Parker was to appear in their upcoming fall ads, and continue until the Spring of 2005. The endorsement sparked many levels of criticism from the public; the glamorous, urban-chic fashionista that her character Carrie Bradshaw has branded her with, was ironic considering the Gap maintains an image that does not promote high-end fashion. Wendy Liebmann, President of WSL strategic Retail, suggested that the Gap "felt the need for an iconic but contemporary face to represent [themselves]. . . . they were perhaps feeling a little insecure, a little in need of some high luster around the brand". However, the ad campaigns were a success, and Parker had given the Gap a new, fresh face that appeared in many commercials, online and print ads, and other promotions.

In March 2005, Parker's contract with the Gap ended, and was replaced with then 17-year-old British soul singer Joss Stone. A rising star at the time, Stone's replacing of Parker was a puzzling move to the public. The company then stated that "While Gap will always seek partnerships with celebrities, Musicians and rising stars, we don't have any Future plans to sign a single person to a multi-season deal like the unique and special relationship we enjoyed with Sarah Jessica".

On July 20, 2006, U.S. cable network Bravo announced it had picked up a reality show produced by Parker under the working title American Artist. Parker participated in the United States version of the hit U.K. television series Who Do You Think You Are? for NBC, in which celebrities were helped to trace their family trees. The executive Producer was Lisa Kudrow, and the series featured Parker, husband Matthew Broderick, Kudrow and others.

In July 2007, following the success of Lovely, Parker released her second fragrance, Covet. In 2007, Parker was a guest on Project Runway for the second challenge. In 2008, Covet Pure Bloom was released as continuous series of Covet. In February 2009, as part of the Lovely collection, Parker launched a series of three new fragrances called Dawn, Endless, and Twilight.

After Sex and the City ended in 2004, rumors of a film version circulated. It was revealed that a script had been completed for such a project. At the time, Parker said such a film would likely never be made. Two years later, preparations were resumed, and the film was released on May 30, 2008. A sequel to the movie, Sex and the City 2, was released in 2010.

Parker guest starred on season 4 of FOX musical comedy series Glee as Isabelle Wright, a Vogue executive who takes Kurt Hummel under her wing after he graduates and moves to New York. Parker runs her own production company, Pretty Matches, which has been creating content for HBO and other channels since 2009. The company is currently running a web series called "City.Ballet" that takes viewers behind the scenes with Dancers of the New York City Ballet.

Parker appeared in the premiere episode of the U.S. version of Who Do You Think You Are? on March 5, 2010, where she discovered she had ancestors involved in the California Gold Rush of 1849–50 and in the Salem Witch Trials of 1692.

In 2012, Parker returned to television for the first time since Sex and the City, portraying Isabelle Wright in three episodes of the FOX series Glee. She is currently starring as Frances Dufresne in the HBO series Divorce (2016–present), for which she was nominated for a Golden Globe Award.

According to a March 2013 interview with the Net-a-Porter online magazine The Edit, "Parker runs her own production company, is on the board of The New York City Ballet, is a UNICEF Ambassador and fundraises for New York schools."

On February 28, 2014, Parker started the SJP Collection, a footwear line, at Nordstrom. She Instagrammed herself overstepping the chain residents on 66 Perry Street put up to prevent overcrowding and unwanted visits to the now-famous address to promote the line, angering neighbors.

In June 2015, she was named the new spokesmodel for Jordache Jeans.

In 2017, Parker announced that she will be partnering with the American Library Association (ALA) to create Book Club Central, a new online platform that will provide reading resources, including recommendations, expert-curated book lists, and other content for book clubs and readers. As well as serving as the honorary chair, Parker will choose the books for the platform and will post discussions of each pick from her own book club.