One of her most acclaimed roles was in Tootsie, for which she was nominated for an Academy Award as Best Supporting Actress in 1982. Her movie debut was as an extra in the 1963 film A Swingin' Affair. During her early career she appeared in several Elvis Presley movies, usually in uncredited roles. She had a cameo appearance as a damsel in distress in The Monkees film Head and in the mid-1970s had significant roles in major films such as Close Encounters of the Third Kind and Young Frankenstein.

While some more recent sources give Teri a revised birthyear of 1949, older sources state her birthyear as 1944. As she certainly wasn't 13 when she played a dancer in "Fun in Acapulco", the above birthdate reflects the more likely birthdate.

Garr has also appeared frequently on television. A notable early appearance was in the Star Trek episode "Assignment: Earth" (1968). She played a recurring character in McCloud and was also a regular on several variety shows in the early 1970s including The Sonny and Cher Comedy Hour, The Ken Berry 'Wow' Show and The Burns and Schreiber Comedy Hour. She hosted Saturday Night Live three times during the early and mid-1980s. She played a recurring character in Friends (the estranged birth mother of Lisa Kudrow's character, Phoebe Buffay) in the late-1990s.

Garr appeared in a series of local television commercials in several markets for various FM radio stations.

Garr has continued to work in spite of having suffered from multiple sclerosis since 1983, undiagnosed until 1999.

Early in her career she was sometimes credited as Terri Garr, Terry Garr, Teri Hope, or Terry Carr.

She is the mother of an adopted daughter, and resides in Los Angeles.