Caroline Kennedy lived from age three until just after her sixth birthday in the White House. After the assassination of her father in November 1963, she lived with her mother and brother in New York City (in the penthouse apartment at 1040 Fifth Avenue, on the Upper East Side of Manhattan).

In 1972, she went to Concord Academy in Massachusetts. She later interned with both her uncle US Senator Edward Kennedy, and The New York Daily News. She began working at the Metropolitan Museum of Art in New York in 1980, where she met her husband, the noted exhibit designer Edwin Schlossberg. They have two daughters, Rose Kennedy Schlossberg, born in 1988, (named after her great-grandmother) and Tatiana Celia Kennedy Schlossberg, born in 1990, (named after Edwin's grandmother, and his former colleague, the lithographer Tatiana Grossman) and one son, John Bouvier Kennedy Schlossberg, born in 1993 (named after his grandfather).

She graduated from Harvard University and from Columbia Law School after completing her education at Brearley School and Convent of the Sacred Heart. She and Ellen Alderman have written two books together on civil liberties:

In Our Defense - The Bill of Rights In Action (1990) and The Right to Privacy (1995) Upon her mother Jacqueline's death in 1994, Caroline was instrumental in planning a private funeral service, when there were plans in progress for a more public event. Caroline reasoned that her mother would have wanted it this way, as she was, for the most part, a person who valued her privacy and dignity. The funeral was thus an invitation-only event, attended by mostly family and close friends. Although invited, President Bill Clinton did not attend the funeral for this reason, as it might have attracted too much unwanted attention (he did attend and speak at the burial however). First Lady Hillary Rodham Clinton attended both events.

She was one of the founders of the Profiles in Courage Award, given annually to someone who exemplifies the type of courage examined in her father's book of the same name. The award is generally given to elected officials who, acting in accord with their conscience, risk their careers by pursuing a larger vision of the national, state or local interest in opposition to popular opinion or powerful pressures from their constituents. In May 2002, she presented an unprecedented Profiles in Courage Award to representatives of the NYPD, the New York City Fire Department, and the military as representatives of all of the people who acted to save the lives of others during the terrorist attacks on September 11, 2001.

She is currently (as of 2006) the president of the Kennedy Library Foundation, and is the chairperson of the American Ballet Theatre.