Ambrose was born in New Haven, Connecticut of Italian descent on her father's side, and attended Choate Rosemary Hall in Wallingford, Connecticut, Wilbur Cross High School, High School in the Community, and the ACES Educational Center for the Arts in New Haven. She is also a trained opera singer who studied voice and opera at the Boston University Tanglewood Institute. Ambrose has been married to photographer Sam Handel since September 2001. The couple has a son, Orson Halcyon.

Ambrose began her career in New York theater, playing in off-Broadway. Her early career also included television appearances, most notably playing supporting guest roles on Law & Order, and a feature guest role on the show as a mentally-challenged young woman raped by a group of popular high school students. Her first film role was In & Out (1997), which was followed by a more prominent role in the chaotic high school comedy Can't Hardly Wait (1998). She was the ingenue lead, Florence "Chicklet" Forrest, in the cult favorite Psycho Beach Party (2000). Ambrose began her role on Six Feet Under in early 2001. She was nominated for the Best Actress in a Supporting Role Emmy Award twice, following the 2002 and 2003 seasons of the critically-acclaimed drama.

In 2006, Ambrose made her Broadway debut in the Lincoln Center Theater revival of Awake and Sing!. In 2007, she appeared as Juliet in the Public Theater's Shakespeare in the Park performance of Romeo and Juliet at the Delacorte Theater in Central Park, to great critical acclaim. She is currently performing as Ophelia in the 2008 performance of Hamlet for Shakespeare in the Park.