Kate was born and raised in Bedford, New York, the daughter of Chris Mara, a scout for the New York Giants, and Kathleen Rooney. She has one older brother, Daniel, and two younger siblings, Patricia and Conor. Kate wanted to be an actress since seeing Les Misérables at a young age; she said she "fell in love with Broadway and musicals", and grew up watching movie musicals on television and going to Broadway shows with her mother. She was especially a fan of Judy Garland's films. She began acting at the age of nine, appearing in a school musical. She attended several youth theater-arts schools and appeared in community theater and in school plays. Later on, she was accepted into the Tisch School of the Arts at New York University to study musical theater, and graduated from Fox Lane High School early by a year. Then she moved to Manhattan in order to act full time.

Kate's first television role was in the drama Law & Order in 1997. She went on to guest star on numerous television series including, Madigan Men, Ed, and Law & Order: Special Victims Unit. Recurring parts on the series Everwood and Nip/Tuck followed in 2003, along with appearances on Cold Case, Boston Public, CSI: Miami, and CSI: Crime Scene Investigation. Mara debuted theatrically in 2003 at the Williamstown Theatre Festival in Landscape of the Body. A large recurring role on the WB Television Network series Jack & Bobby was next in 2005. Mara appeared in 2006 on Fox television series 24, playing computer analyst Shari Rothenberg for a 5 episode arc.

Mara's film debut was in Random Hearts with Harrison Fordin 1999, directed by Sydney Pollack. She next appeared in the Sundance Film Festival award-winning films Joe the King (1999) and Tadpole (2002). She later starred in Urban Legends: Bloody Mary, and appeared in The Californians in 2005. However, it was her supporting role in the Academy Award-winning Brokeback Mountain (2005) that brought her more widespread attention. At the beginning of 2006, Mara signed with the William Morris Agency. That year, she appeared in Zoom and in We Are Marshall. We Are Marshall recalled the aftermath of the 1970 Marshall University plane crash that took the lives of most of the football team, with Mara playing fictional cheerleader Annie Cantrell. In 2007, Mara appeared in the comedy Full of It for New Line Cinema. The film later aired on television as Big Liar on Campus. Mara was also featured in an advertising campaign for clothing retailer Gap called, "khakis with attitude." She appeared in Shooter, a thriller about a master sniper lured out of retirement to prevent an assassination. Also in 2007, Mara finished the film Transsiberian by Brad Anderson.

In 2008, Mara will star in Stone of Destiny, written and directed by Charles Martin Smith, a film about the theft of the Stone of Scone on Christmas Day, 1950. Mara plays Kay Matheson, one of four students that removed the stone in a Scottish nationalist plot. Mara will also appear in Deal, a film by Michael Corrente, and star in The Open Road alongside Justin Timberlake.