Born in Charleston, South Carolina, Chandler began her acting career on Broadway in 1917. Within a few years she was playing Shakespearean roles opposite such highly regarded performers as John Barrymore.

She made her film debut in 1927 in The Music Master and in 1930 joined Leslie Howard, Douglas Fairbanks Jr., and Beryl Mercer for the film version of the stage success Outward Bound. The unusual story told of a group of passengers on an ocean liner who gradually realise that they are all dead. Chandler, with her blonde hair and ethereal quality was considered to be perfectly cast, and she received critical praise for her performance.

Chandler did not want to play the role for which she is probably best remembered, as Mina Harker in Dracula as she wanted to play Alice in Alice in Wonderland, but this part was given to Charlotte Henry. Chandler, disappointed, joined David Manners and Bela Lugosi in what became one of the most successful movies made until that time. Once again, Chandler received plaudits for her performance. Chandler appeared with Manners that same year in the legendary Lost Generation celebration of alcohol in Paris, The Last Flight, also starring Richard Barthelmess and Johnny Mack Brown. She achieved more successes in A House Divided (1931) and Christopher Strong (1932) and began dividing her time between Hollywood and Broadway. Chandler played a role on Lux Radio in "Alibi Ike" with Joe E. Brown (1937). Among her stage successes of the 1930s were Pride and Prejudice in 1935, and a reprise of her role in Outward Bound in 1938.

By this time she was battling alcoholism and her acting career declined. She was hospitalised several times but was unable to gain control over her life. In 1950, Chandler was severely burned in an apartment fire, caused by her falling asleep while smoking. She survived but her face was badly disfigured, and ruled out any chance of a comeback. Her alcoholism continued unabated. She died April 30, 1965 from cardiac arrest during surgery for a stomach ulcer in Hollywood, California. Her remains were cremated in accordance with her wishes but remained unclaimed at the Chapel of the Pines Crematory.