Born Julia Miller in New York City, she received her B.A. in Political Science from Mount Holyoke College in 1965, where she met Michael Phillips, whom she married, and whom she would later divorce. She worked for a time editing articles.

In 1973, The Sting won the Academy Award for Best Picture and made Phillips the first woman to win an Oscar as a producer (an award shared by Tony Bill and Phillips' then-husband Michael Phillips). In 1977, Taxi Driver, produced by the Phillipses, was nominated for Best Picture. After her third major film, Close Encounters of the Third Kind, produced with Michael Phillips and associate producer/production manager Clark Paylow, François Truffaut publicly criticized Phillips as incompetent, a charge she rejected, writing that she had essentially nursed Truffaut through his self-created nightmare of implied hearing loss, sickness and chaos during the production. Phillips was also a notorious drug user and abuser (cocaine especially), which she herself chronicled in detail in her memoirs. The side-effects of cocaine addiction caused her to be fired from Close Encounters of the Third Kind during post-production.

In 1991 Phillips wrote the no-holds-barred autobiography You'll Never Eat Lunch in This Town Again about her experiences in Hollywood. The book topped the New York Times bestseller list but its revelations about high-profile film personalities and Hollywood's drug/film production culture, casting couch mentality made her one of the most despised people in the film industry. In 1995, she followed up her story with a second book, Driving Under the Affluence, which is mostly about the impact her first book's reception had on her life. In 2000, she also helped Matt Drudge write his Drudge Manifesto.

Julia Phillips died in West Hollywood, California, at the age of 57, from cancer on New Year's Day, 2002, and was interred in the Hillside Memorial Park Cemetery in Culver City, California.

You'll Never Eat Lunch in This Town Again by Julia Phillips (Random House, 1991), ISBN 0-394-57574-1