Bennett's television debut was in the drama series 'Going Out', before appearing in Coronation Street between 1982 and 1984 as Sharon Gaskell, the Fairclough's foster daughter. She returned to the role in 1999. She played dim-witted blonde Tracy Glazebrook in the pilot of Steven Moffat's sitcom Joking Apart (1991), a role which she reprised for the subsequent two full-length series in 1993 and 1995. She played Millandra in the film version of Shirley Valentine (1989).

She appeared in She Loves Me at the Savoy Theatre in 1994, for which she won the Laurence Olivier Award as Best Supporting Performance in a Musical. She played Ida in Honk!, which won the 2000 Olivier Award for Best Musical.

In 2003, she was critically acclaimed for her role in the London production of High Society, and for which she was nominated for an Olivier Award in 2004. She appeared in Sex, Chips and Rock 'n' Roll at the Royal Exchange Theatre in Manchester in 2005, for which she was nominated for a TMA Theatre Award as Best Supporting Actress in a Musical.

In January 2006, Bennett joined the West End production of Les Misérables in the role of Madame Thénardier at the Queen's Theatre, which she continued to play to July 2007.

In October 2007, she began her run in the role of Velma Von Tussle in the London premiere of the musical Hairspray at the Shaftesbury Theatre. She mentioned on a televised interview Alan Titchmarsh that it was a "great show" and that she enjoyed doing it, but also said it was exhausting, pointing out that to begin with, the wiring under her wig weighs 10 lbs, making some of the dancing difficult. In spite of this, her efforts were rewarded in March 2008, when she received her second Olivier Award for Best Supporting Performance in a Musical for her performance.

In February 2010, Bennett took on the role of Judy Garland in the first London production of Peter Quilter's play, End of the Rainbow. The production premiered with Bennett playing Judy Garland at Northampton's Royal Theatre, and subsequently transferred to London's West End where it was a critical success. Bennett received an Olivier Award nomination for Best Actress for her performance. The production transferred to Broadway in March 2012, with Bennett reprising her role. For her performance in the Broadway production, Bennett received a Tony Award nomination for Best Leading Actress in a Play, and won the Outer Critics Circle Award and Drama Desk Award for Outstanding Actress in a Play.

In 2013 she joined the cast of detective series Scott & Bailey as Sharon, the estranged mother of DC Bailey.

In 2015 and 2016 she played Laura Henderson in the musical Mrs Henderson Presents and received a nomination for the Olivier Awards 2016 in the category Best Actress in a Musical.

In autumn 2017, she played the role of Carlotta in the National Theatre production of Follies by Stephen Sondheim, singing the song "I'm Still Here".