Named after Shirley Temple, MacLaine was born Shirley MacLean Beaty in Richmond, Virginia. Her father, Ira Owens Beaty, was a professor of psychology, public school administrator, and real estate agent, and her mother, Kathlyn Corinne (née MacLean), was a drama teacher born in Nova Scotia, Canada; MacLaine's grandparents were also teachers. The family was devoutly Baptist. While she was still a child, MacLaine's father moved the family from Richmond to Norfolk, and then to Arlington, Virginia and Waverly, eventually taking a position at Arlington's Thomas Jefferson Junior High School.

Shirley had very weak ankles as a child, so her mother decided to enroll her in ballet class. Strongly motivated by ballet throughout her youth, she never missed a class. In classical romantic pieces like "Romeo & Juliet" and "Sleeping Beauty," being the tallest in the class, she always played the boys' role. Eventually, MacLaine decided that professional ballet wasn't for her. In her own words, she grew too tall (she would be over 6-feet tall en Pointe) and did not have the "beautifully constructed feet" (high arches, high insteps). After leaving ballet, MacLaine pursued Broadway dancing. Eventually, she turned to acting.

She attended Washington-Lee High School, where she was on the cheerleading squad and acted in the school's productions. The summer before her senior year, she was in New York to try acting on Broadway with some success. After she graduated, she returned and within a year she became an understudy to actress Carol Haney in The Pajama Game; Haney broke her ankle, and MacLaine replaced her. A few months after, with Haney still out of commission, film producer Hal B. Wallis was in the audience, took note of MacLaine, and signed her to work for Paramount Pictures. She later sued Wallis over a contractual dispute, a suit that is credited with ending the old-style studio star system of actor management.

MacLaine made her debut in the Alfred Hitchcock film The Trouble with Harry (1955), for which she won the Golden Globe Award for New Star Of The Year - Actress. In 1956, she had roles in Hot Spell and Around the World in Eighty Days. At the same time, she starred in Some Came Running, the film that gave her her first Academy Award nomination - one of five that the film received - and a Golden Globe nomination.

Her second nomination came two years later for The Apartment, starring with Jack Lemmon. The film won 5 Oscars, including Best Director for Billy Wilder. She later said, "I thought I would win for The Apartment, but then Elizabeth Taylor had a tracheotomy". She starred in The Children's Hour (1961) also starring Audrey Hepburn, based on the play by Lillian Hellman. She was again nominated, this time for Irma la Douce (1963), for which she reunited with Wilder and Lemmon.Don Siegel her director on Two Mules for Sister Sara (1970) in which she starred opposite Clint Eastwood, once said, "It's hard to feel any great warmth to her. She's too unfeminine and has too much balls. She's very, very hard."

In 1975, she received a nomination for Best Documentary Feature for her documentary film A China Memoir. Two years later, she was once again nominated for The Turning Point co-starring Anne Bancroft, in which she portrayed a retired ballerina much like herself. In 1983 she won her first Oscar for Terms of Endearment. The film won another four Oscars; one for Jack Nicholson and three for director James L. Brooks. In 1988, MacLaine won a Golden Globe for Best Actress for Madame Sousatzka.

She continued to star in major films, such as Steel Magnolias with Julia Roberts. She made her feature-film directorial debut in Bruno, MacLaine starred as Helen in this film, which was released to video as The Dress Code. In 2007 she completed Closing the Ring, directed by Richard Attenborough and starring Christopher Plummer. Other notable films in which MacLaine has starred include Sweet Charity (1968), Being There (1979) with Peter Sellers, Postcards From the Edge (1990) with actress Meryl Streep, playing a fictionalized version of Debbie Reynolds with a screenplay by Reynolds's daughter, Carrie Fisher, Used People with Jessica Tandy and Kathy Bates, Guarding Tess (1994) with Nicolas Cage, Rumor Has It (2005) with Kevin Costner and Jennifer Aniston and In Her Shoes with Cameron Diaz.

MacLaine is also set to star in Poor Things, a drama.

MacLaine has also appeared in numerous television projects including an autobiographical miniseries based upon the book Out on a Limb, The Salem Witch Trials, These Old Broads written by Carrie Fisher and co-starring Elizabeth Taylor, Debbie Reynolds, and Joan Collins, and Coco, a Lifetime production based on the life of Coco Chanel. She also had a short-lived sit-com called Shirley's World.

MacLaine has a star on the Hollywood Walk of Fame at 1165 Vine Street.

MacLaine was married to businessman Steve Parker until they divorced in 1982. They had a daughter, Sachi Parker (born 1956).

MacLaine has a strong and enduring interest in spirituality. Many of her best-selling books, such as Out on a Limb and Dancing in the Light, have it as their central theme. Her interests have led her to such forms of spiritual exploration as walking El Camino de Santiago, working with Chris Griscom, and practicing Transcendental Meditation.

Her well-known interest in New Age spirituality has made its way into several of her films. In Albert Brooks's 1991 romantic comedy Defending Your Life, the recently deceased lead characters, played by Brooks and Meryl Streep, are astonished to find MacLaine introducing their past lives in the "Past Lives Pavilion." In the 2001 made-for-television movie These Old Broads, starring MacLaine, Debbie Reynolds, Joan Collins, and Elizabeth Taylor, and written by Reynolds's daughter, Carrie Fisher, MacLaine's character is a devotee of New Age spirituality.

MacLaine found her way into many law casebooks when she sued Twentieth Century-Fox for breach of contract. She was to play a role in a film titled Bloomer Girl, but the production was canceled. Twentieth Century-Fox offered her a role in another film, Big Country, Big Man, in hopes of getting out of its contractual obligation to pay her for the canceled film. MacLaine's refusal led to an appeal by Twentieth Century-Fox to the Supreme Court of California in 1970, where the Court ruled against Fox, calling the studio's alternate role offer "different or inferior" employment. Parker v. Twentieth Century-Fox Film Corp., 474 P.2d 689 (Cal. 1970).

She also is godmother to the daughter of U.S. Representative Dennis Kucinich, a Democrat and former mayor of Cleveland, Ohio.