Applegate was born in Hollywood, California. Her father, Robert Applegate, was a record producer. Her mother, Nancy Lee Priddy, was an actress-singer who survived breast cancer. Her parents split up after she was born, and her father remarried.

Applegate quit school at age 17 to pursue acting. From 1987 to 1997, she played Kelly Bundy on Married... with Children. From 1998 to 2000, she starred in her own sitcom called Jesse. In the 1980s and early 1990s, she was nominated four times in the annual Youth in Film Awards, two of which she won.

On October 20, 2001, Applegate married longtime boyfriend Johnathon Schaech, in a small mixed-religion Palm Springs ceremony attended by family and close friends. On December 5, 2005 the publicists of Applegate and Schaech confirmed that they had filed for divorce in Los Angeles Superior Court.

While playing the title role in a revival of Sweet Charity, she injured her foot, and it was announced that the musical would close during previews. She persuaded the producers to rescind their decision, and on May 4, 2005 she made her Broadway debut to moderately good reviews. Sweet Charity ended its Broadway run on December 31, 2005. She also guest-starred on Friends as Amy Green, Rachel's (Jennifer Aniston) older sister (2004).

She is friends with actresses Nicole Eggert and Gwyneth Paltrow. She is a supporter of PETA.

She studies jazz and dance.