Schoonmaker did not live in the United States until she was a teenager, in 1955, and was initially alienated and dumbfounded by American culture. Schoonmaker was interested in a career in international diplomacy and began attending Cornell University in 1957, where she studied political science and the Russian language.When she graduated from Cornell in 1961, she began taking State Department tests in order to apply for positions in the U.S. government.

She signed up for a brief six-week course in filmmaking at New York University (NYU), where she came into contact with budding young filmmaker Martin Scorsese, who was struggling to complete his film What's a Nice Girl Like You Doing in a Place Like This? A negative cutter had butchered his film, not leaving enough negative frames to allow for hot splicing. A film professor asked her to help Scorsese; a close working relationship with him unfolded over the next thirty-five years. Schoonmaker edited Scorsese's first feature film, Who's That Knocking at My Door (1967).

She was introduced to Michael Powell by Scorsese and London-based film Producer Frixos Constantine. The couple were married from May 19, 1984 until his death in 1990. The couple had no children.

In 2012, the Motion Picture Editors Guild published a list of the 75 best-edited films of all time based on a survey of its membership. Three films edited by Schoonmaker with Scorsese are on this list: Raging Bull (1980), listed first, Goodfellas (1990), listed fifteenth, and Hugo (2011), listed sixty-ninth. Only George Tomasini, the Editor of Alfred Hitchcock's films in the 1950s, has more appearances on this list.