In 1967, she married her first husband Neil Johnston and became pregnant at the age of 24. She suffered a miscarriage shortly after and the couple later divorced but she kept his surname as her professional name. She has one son Joel from her second marriage to David Pammenter. She has one grandchild.

In 1970, Johnston was sexually attacked at the age of 27 which inspired her storyline in Brookside as Sheila Grant, where she was raped.

Despite playing the role of heavy smoker Barbara Royle in The Royle Family, Johnston gave up smoking in 1978, but had to smoke low-tar cigarettes while playing the role. Johnston is opposed to smoking.

From 1982 to 1990, she appeared as Sheila Grant in the soap opera Brookside. She appeared in the show's first ever episode on 2 November 1982 – aired on the day that Channel 4 went on air – and her last episode was aired in September 1990, when the character was written out of the series following her divorce from Bobby Grant (Ricky Tomlinson) and remarriage to Billy Corkhill (John McArdle).

In 1989 Johnston, assisted by Lesley Thomson, published her first book, a memoir titled Hold on to the Messy Times. In 2011, she published another memoir titled Things I Couldn't Tell My Mother.

Since then she has appeared in many drama series and films, including Inspector Morse, Hetty Wainthropp Investigates, Brassed Off and My Uncle Silas. In 1992, Johnston appeared in the three-part award-winning drama Goodbye Cruel World, in which she portrayed a woman coming to terms with a muscle-wasting illness.

Johnston may be best known as Barbara Royle in the BBC comedy series The Royle Family, appearing with her former on-screen husband in Brookside, Ricky Tomlinson, from the show's inception in September 1998 until it ended at Christmas 2000. She also appeared in a one-off special which aired in October 2006. From 2000-11, she starred in the television series Waking the Dead, in which she played the role of psychological profiler Grace Foley, alongside Trevor Eve.

In 2004, she appeared in one episode of the series, Who Do You Think You Are?, in which she traced her family tree.

Johnston was appointed Officer of the Order of the British Empire (OBE) in the 2009 Birthday Honours. In November 2010, she was awarded an honorary doctorate by University of Chester at Chester Cathedral.

She starred in Jennifer Saunders's comedy drama Jam & Jerusalem on BBC One, alongside Joanna Lumley, Maggie Steed and David Mitchell. The first series aired in 2006, the second series began on New Year's Day 2008 and the third in August 2009. Also in 2008, she played Affery Flintwinch in the BBC adaptation of Little Dorrit. In May 2008 it was confirmed Johnston would return as Barbara Royle for another episode of The Royle Family, which aired on Christmas Day 2008 on BBC One. The show returned for further Christmas specials in 2009, 2010 and 2012. She shared a role with Billie Piper in the television adaptation of A Passionate Woman which aired on BBC One on 11 April 2010.

In December 2011, she played Eileen Lewis in the BBC one-off drama Lapland, a role which she reprised in 2013 for a series, Being Eileen.

On 2 April 2012, Coronation Street series Producer Phil Collinson announced Johnston had joined the soap opera as Gloria, the mother of Stella Price (played by Michelle Collins). She made her first screen appearance on 5 September 2012. It was announced in June 2013 that Johnston would leave the soap opera in 2014 to pursue other acting roles. She departed on 21 February 2014.

In May 2014 it was announced that Johnston will guest star in the fifth series of the period drama Downton Abbey. She will play Denker, a lady's maid to the Dowager Countess, played by Dame Maggie Smith. Johnston currently portrays Julie in the BBC Radio 4 series Love in Recovery.

In February 2018 Johnston played Kathy in 'Lost' episode 2 series 9 on Jimmy McGovern Moving on.