Born in Ilford, England and growing up in East Grinstead, Leeves trained as a ballet dancer and worked as a model, until she made her first film appearance as an angel in Monty Python's The Meaning of Life. She was a regular on The Benny Hill Show and appeared in a David Lee Roth music video for the song "California Girls", but struggled for several years to establish herself. She became somewhat visible as the flighty record company employee on the syndicated sitcom Throb!.

She had a recurring role in the television series Murphy Brown which provided her first period of success, playing "Audrey", the loud and awkward girlfriend of producer, Miles Silverberg (played by Grant Shaud). Leeves also appeared as the troublesome Marla, "the virgin," in three risqué episodes of Seinfeld: "The Virgin", "The Contest" and "The Finale - Part 2". Moreover during this period Leeves was cast as Holly for the US version of the science-fiction comedy Red Dwarf.

In 1993, she joined the cast of the television series Frasier. Leeves played the beautiful, eccentric, new age and forthright Daphne Moon, and she became a popular actress in this role. By the conclusion of Frasier, Leeves had received an Emmy Award nomination for her role, and had become the highest paid British actress in Hollywood.

Appearing less frequently in cinema, Leeves lent her voice to the animated film James and the Giant Peach (1996) and acted in the film Music of the Heart (1999).

In 2004 she hosted an episode of Have I Got News for You.

Her newest show is The WB's summer 2006 sitcom Misconceptions

She has been married to Marshall Coben, a Paramount T.V executive, since December 21, 1996, and they have two children. Her sister, Katie, is also settled in southern California.