Rai was the first runner-up of the Miss India pageant, and the winner of the Miss World pageant of 1994. She made her acting debut in the 1997 biographical film, Iruvar and was starred in the 1998 blockbuster film Jeans, which was India's official entry for 71st Academy Award for Best Foreign Language Film. She earned wide public recognition and Best Actress awards at Filmfare for her leading roles in Sanjay Leela Bhansali's 1999 melodrama Hum Dil De Chuke Sanam and the 2002 period film Devdas. She gained critical appreciation for her portrayal of Tagore's heroine Binodini in Rituparno Ghosh's 2003 film Chokher Bali, and a depressed woman in Ghosh's 2004 relationship drama Raincoat. Following a series of commercially unsuccessful films, Rai featured in the 2006 blockbuster adventure film Dhoom 2. In 2008 she was starred in the historical romance Jodhaa Akbar, and the thriller film, Sarkar Raj. In 2010 she has appeared in science fiction, magnum opus Enthiran. She garnered wide critical acclaim for her work in Bhansali's 2010 romantic drama Guzaarish.
Her off-screen roles include duties as a brand ambassador for several charity organisations and campaigns; she is a Goodwill Ambassador for the Joint United Nations Programme on HIV/AIDS (UNAIDS). Following a tumultuous relationship with actor Salman Khan, Rai married actor Abhishek Bachchan in 2007 and has a daughter.