Binoche was born in Paris, the daughter of Jean-Marie Binoche, a director, actor, and sculptor, and Monique Stalens, a teacher, director, and actress. Binoche's mother is of Polish descent, and her maternal Polish-Catholic grandparents were imprisoned at Auschwitz because they were intellectuals. Binoche also has French, Flemish, Brazilian and Moroccan ancestry. Her parents divorced when she was four and Binoche and her sister Marion were sent to a boarding school.

Binoche began acting in amateur stage productions, and at 17 directed and starred in a student production of the Eugène Ionesco play, Exit the King. The next year, she studied acting at the National Conservatory of Dramatic Arts of Paris (CNSAD). She found an agent through a friend and joined a theatre troupe in which she toured France, Belgium and Switzerland under the pseudonym of "Juliette Adrienne".

After quitting the CNSAD, she began acting lessons with famed coach Vera Gregh. Following in her mother's footsteps, she became a stage actress, occasionally taking small parts in French feature films. Her first screen role was a small part in the 1983 television film Dorothée, danseuse de corde by Jacques Fensten, which was followed by a similarly small role in the provincial television film Fort bloque by Pierrick Guinnard. After Binoche secured her first big screen appearance with a small supporting role in Pascal Kané's Algeria-themed Liberty Belle, she decided to pursue a career in cinema.

Binoche's early films saw her firmly established as a French star of some renown. The recurring themes of these films were of contemporary young women exploring their lives and their sexuality. Small roles in Les Nanas and Adieu blaireau led to more significant exposure in Jean-Luc Godard's Je vous salue, Marie and Jacques Doillon's La Vie de Famille which cast her as the teenage stepdaughter of Sami Frey's character. This film was to set the theme and tone of the early career.

In 1985, Binoche secured the lead role in André Téchiné's Rendez-vous. The film premiered at the Cannes Film Festival that year, winning Best Director. In 1986, Binoche was nominated for her first César Award for Best Actress for the film. Binoche's next film was a role in Mon beau-frère a tué ma soeur by Jacques Rouffio, which was a critical and commercial failure. Later that year, she starred opposite Michel Piccoli in Léos Carax's Mauvais Sang. This film, however, was a critical and commercial success, leading to Binoche's second César Award nomination. In August 1986, she portrayed Tereza in Philip Kaufman's The Unbearable Lightness of Being based on the Milan Kundera novel. This was Binoche's first English language role and was a worldwide success with critics and audiences alike. After this success, Binoche decided to return to France rather than pursue an international career.

In 1988, she filmed the lead in Pierre Pradinas's Un tour de manège, a little-seen French film. Later that year she began work on Léos Carax's Les Amants du Pont-Neuf. The film was beset by problems and took three years to complete. When it was released in 1991, The Lovers on the Bridge was a critical success. Binoche won a European Film Award for best actress as well as her third César Award nomination.

Following the long shoot of Les Amants du Pont-Neuf, Binoche relocated to London for the 1992 productions of Emily Brontë's Wuthering Heights and Damage, both of which considerably enhanced her international reputation. For Damage Binoche received her fourth César Award nomination. In 1993, she appeared in Krzysztof Kieslowski's Three Colors: Blue to much critical acclaim. The film premiered at the 1993 Venice Film Festival, landed Binoche a Prize in Venice, a César Award for Best Actress, and a Golden Globe nomination. After this success, she took a short sabbatical during which she gave birth to her son, Raphael.

In 1995, Binoche appeared in a big-budget adaptation of Jean Giono's The Horseman on the Roof directed by Jean-Paul Rappeneau. The film was a box-office success around the world and Binoche was again nominated for a César Award for Best Actress. This role as a romantic heroine was to color the direction of many of her roles in the late 1990s.

In 1996, Binoche appeared in A Couch in New York by Chantal Akerman. The film was a flop, but her next film was The English Patient, which was based on the acclaimed novel by Michael Ondaatje and directed by Anthony Minghella. The English Patient was a worldwide hit. It received nine Academy Awards, including Best Supporting Actress for Binoche. With this film, she became the second French cinema actress to win an Oscar. She said in her acceptance speech that it was such a surprise, and that she had thought fellow nominee Lauren Bacall was going to win; she started to thank people, but only got past her director Anthony Minghella before laughing that it "must be a dream... a French dream!"

After this international hit, Binoche returned to France and began work opposite Daniel Auteuil on Claude Berri's Lucie Aubrac, which was based on a true story. However, Binoche was released from this film six weeks into the shoot, over differences with Berri regarding the authenticity of his script. Next she worked again with André Téchiné on Alice et Martin (1998), followed in 1999 by Children of the Century in which she played 19th-century French writer George Sand.