Cornwell's father served in the RAF and she grew up in Britain where she attended a convent school, before moving to Australia where her family emigrated. She has written about her childhood experiences in her autobiography Adventures of a Jelly Baby. She returned to Britain, where she became a professional dancer and comedian in her teens, working her act between the nudes at the Windmill Theatre before becoming an actress. Her long career includes roles in radio's The Navy Lark, the controversial play Oh! What A Lovely War, her own TV comedy series Moody and Pegg, and several seasons with the Royal Shakespeare Company.

Cornwell's movie roles include The Movie and Mad Cows. On television she has appeared in Dixon of Dock Green, Cakes and Ale, Bergerac, Doctor Who (the episode Paradise Towers), several episodes of Farrington of the F.O., The Famous Five, The Bill, Heartbeat, Miss Marple and Midsomer Murders. She also appeared on radio as WREN Cornwell in The Navy Lark. Judy is also appearing in BBC soap opera EastEnders as Queenie Trott, the mean tyrant mother of lovable loser Heather Trott. She is best known, however, for her portrayal of lovable working-class housewife "Daisy" in the popular sitcom Keeping Up Appearances, which ran from 1990 to 1995.

Cornwell has published a number of books, including her autobiography Adventures of a Jelly Baby (published in 2005), and several novels, including Cow and Cow Parsley in 1985, Fishcakes at the Ritz in 1989, The Seventh Sunrise in 1994, and Fear and Favour in 1996.