Smith was born Martha Maria Yeardley Smith on July 3, 1964 in Paris, France. Her father Joseph Smith worked for United Press International in Paris and moved to Washington, D.C., United States in 1966 where he became The Washington Post's first official obituary editor. Her mother, Martha Mayor, was a gallery worker. Smith's parents later divorced. Smith labeled her family "upper crust and reserved".As a child, Smith was often mocked because of her unusual first name and her voice. Smith has stated: "I've sounded pretty much the same way since I was six. Maybe [my voice is] a little deeper now." She made her acting debut in a sixth-grade play.

Smith became a professional actress in 1982 after graduating from drama school. After appearances in a number of school plays she joined the local Arena Stage theater group on an apprenticeship, featuring in their production of Peter Pan. She went on to star in several other plays in Washington. She moved to New York City in 1984 and appeared in the Broadway production of The Real Thing alongside Jeremy Ironsand Glenn Close

Her first film role came in 1985's Heaven Help Us. She then played Putter in The Legend of Billie Jean. The film was a box office bomb and critically panned although Smith "thought it would be the movie that launched my career. And then it was out at the box office about 10 days before it died." When filming was over, she rejoined The Real Thing before being out of work for six months and worried her career was over. However, the following year she played Connie in Stephen King's Maximum Overdrive, noting it was "truly a dreadful film but I had a great part in it."

She moved to Los Angeles, California in 1986 on the "semi-promise" of a part in a TV film. After the audition the role was given to another actress. Smith realized "that people don't mean what they say. It's not malicious. They just don't realize how much impact they have on an impressionable actor—and all actors are impressionable." From then on, she decided to "just sort of build a wall around myself," to cope with the disappointment of not getting a part. In Los Angeles, Smith appeared in theatrical productions of Living On Salvation Street, (for which she was paid $14 for each performance) Boys and Girls/Men and Women and How the Other Half Loves, and played the recurring role of Luella Waters on the Showtime series Brothers. She appeared in the films The Legend of Billie Jean and Ginger Ale Afternoon as "trailer-park girls." She later spoke of her regrets of appearing in the latter in her one-woman show More.

Smith's longest-running role is voicing Lisa Simpson on The Simpsons. She has voiced Lisa since 1987, beginning with the The Simpsons shorts on The Tracey Ullman Show. Smith had initially been asked to audition for the role of Bart but casting director Bonita Pietila believed her voice was too high. Smith later recalled "I always sounded too much like a girl, I read two lines as Bart and they said, 'Thanks for coming!'" Smith was given the role of Lisa instead, although she almost turned it down. Pietila stated, having seen her in Living on Salvation Street, Smith was always her preferred choice. In order to perform the voice, Smith lifts her voice up a little. Lisa is the only regular character voiced by Smith, although in some earlier episodes she provided some of Maggie's squeaks and occasional speaking parts.[15] Smith has only voiced characters other than Lisa on very rare occasions, with those characters usually being some derivative of Lisa, such as Lisa Bella in "Last Tap Dance in Springfield" (season 11, 2000) and Lisa, Jr. in "Missionary: Impossible". (season 11, 2000) Smith spends two days a week recording the show.

Until 1998, Smith was paid $30,000 per episode. During a pay dispute in 1998, Fox threatened to replace the six main voice actors with new actors, going as far as preparing to cast new voices. However, the dispute was soon resolved and she received $125,000 per episode until 2004 when the voice actors demanded that they be paid $360,000 an episode. The issue was resolved a month later, and Smith earned $250,000 per episode. After salary renegotiations in 2008, the voice actors receive approximately $400,000 per episode.

Despite the fame of Lisa Simpson, Smith is rarely recognized in public, which she doesn't mind, saying "it's wonderful to be in the midst of all this hype about the show, and people enjoying the show so much, and to be totally a fly on the wall; people never recognize me solely from my voice." In a 2009 interview with The Guardian she commented: "It's the best job ever. I have nothing but gratitude for the amount of freedom The Simpsons has bought me in my life."

Smith received a Primetime Emmy Award in 1992 but felt it wasn't worth anything, saying "there’s part of me that feels it wasn’t even a real Emmy." This is because the Emmy for Outstanding Voice-Over Performance is a Creative Arts award not voted on by the regular Emmy voters and not handed out during the primetime telecast. However, Smith says "if I had to be associated with one character in fiction, I will always be thrilled that it was Lisa Simpson."The show's creator Matt Groening has called Smith very similar to Lisa: "Yeardley has strong moral views about her character. There are lines that are written for Lisa that Yeardley reads and says, 'No, I wouldn't say that.'" Writer Jay Kogen praised her performance on the show, particularly in the episode "Lisa's Substitute", as able "to move past comedy to something really strong and serious and dramatic."

From 1991-1994, alongside The Simpsons, Smith acted in the sitcom Herman's Head as Louise. Her other television roles include recurring appearances as Marelene on Dharma & Greg, and Penny in two episodes of Dead Like Me. Smith has also appeared in Phil of the Future and Teen Angel. Her one scene role as pregnant checkout girl Nancy in 1991's City Slickers earned her "more attention than all [her] previous roles combined," and taught her that "that it's far better to have small parts in big movies that everyone sees." In 1997, she appeared as Lulu the palm reader in the independent film Just Write. Her other roles include parts in Barry Levinson's Toys and James L. Brooks' As Good as It Gets. Brooks, who is also executive producer of The Simpsons, had cast Smith in his 1994 film I'll Do Anything (in one of the film's musical numbers) but her part was cut. Aside from The Simpsons, Smith has recorded few voice over parts, only commercials and the film We're Back! A Dinosaur's Story. She "had a voice over agent for about two years, and I used to go out [on auditions] all the time, but it never really came to anything. Everybody said, 'Oh Yeardley, you'll clean up,' and that was definitely not the case."

In 2004 Smith performed her own off-broadway one-woman show entitled More at the Union Square Theatre in New York City. Directed by Judith Ivey, the play is about her mixed feelings over the success of The Simpsons, her parents, her relationships and her struggles with bulimia. The New York Times critic Margo Jefferson called it an "appealing if overlong show", adding that "The career narrative needed shortening. This would involve some editing and revising but wouldn't taint the best parts of More. It is refreshing to hear a celebrity talk cleanly about being fame-driven and about not getting the degree or the kind of fame you craved. It's fun to watch a skilled actress use her craft to the full."She would later perform the play for three weeks in Los Angeles the following year.

Smith starred in and served as executive producer for the independent relationship comedy Waiting For Ophelia, which will be released in 2009. She funded the film, which was written by Adam Carl and based on a stage play he wrote in 2003. She said: "I loved it. I never get to play parts like that. I always play the friend of a friend, never the lead. And the script surprised me." Carl stated it was very unlikely she would recoup her money, but Smith decided she "believe[d] in this project, and my expectations have already been fulfilled by making the movie", and added: "You can support art even if it's not going to make a zillion dollars." It premiered on April 4, 2009 at the Phoenix Film Festival.