Born in New York City, Jennifer Grey is the daughter of stage and screen actor Joel Grey and the granddaughter of comedian and musician Mickey Katz. Her mother is Jo Wilder. She is an alumna of The Dalton School, an elite private school in Manhattan, and studied both dance and acting. Her commercial debut was at the age of 19, in an ad for the Dr Pepper soft drink. After other small roles, she landed the part of angry sister Jeanie in the hit 1986 film Ferris Bueller's Day Off. The following year she reunited with Patrick Swayze whom she had played opposite in Red Dawn, for her biggest role ever, Frances "Baby" Houseman in Dirty Dancing.

In the early 1990s, Grey underwent a rhinoplasty procedure that was so botched she required a second plastic surgery to repair the damage. The result was a face so altered that even close friends failed to recognize her, and the major change in her appearance negatively affected her career. Of the experience she said, "I went in the operating theater a celebrity - and come out anonymous. It was like being in a witness protection program or being invisible." She briefly considered starting over with a new name to go with the new face, Wanda West, but then stuck with her original name. In 1999, she reappeared in the short-lived 1999 ABC sitcom It's Like, You Know... portraying a variation of herself, a struggling actress named Jennifer Grey. In an episode of the series, she poked fun at herself with a storyline about a much-publicized nose job.

Grey also appeared with Shirley Maclaine Liza Minnelli, and Kathy Bates in the CBS television movie The West Side Waltz, adapted by Ernest Thompson from his play, an episode of Friends as Mindy, and she had a small role in the 2000 film Bounce with Gwyneth Paltrowand Ben Affleck Her sole Broadway theatre credit is The Twilight of the Golds (1993).

Following engagements to Matthew Broderickand Johnny Depp and after dating George Stephanopoulos, Grey married actor/director Clark Gregg (The New Adventures of Old Christine) on July 21, 2001, and their daughter Stella was born in December of that year. The couple co-starred in the Lifetime movie Road to Christmas.

Grey has recently appeared as Daphne, Meyer's fiancee, on the HBO series John from Cincinnati.