Taylor was born in Allentown, Pennsylvania, the daughter of Joan, a homemaker, and Skip Taylor, an owner of a security company. She grew up in neighboring Wescosville, Pennsylvania. Taylor has a brother, Brian, and attended Allentown Central Catholic High School.
Taylor began her acting career in 1989 at the age of 18 on the Nickelodeon children's television series Hey Dude where she played the lifeguard Melody Hanson. She continued in that role through 1991 while making various guest appearances on other programs. In 1995, Taylor was cast as Marcia Brady in The Brady Bunch Movie and later in A Very Brady Sequel.
Following The Brady Bunch Movie, Taylor's career advanced, highlighted by several comedic guest appearances on Ellen, landing the lead role in the television series Party Girl, based on the 1995 film of the same name, and more guest appearances on Seinfeld and Friends. She also played Drew Barrymore's cousin, Holly Sullivan, in the 1998 comedy The Wedding Singer.
Later TV appearances include a guest star in 2005 in two episodes of the cult favorite Arrested Development as "Sally Sitwell" and in 2006 in an episode of NBC's My Name Is Earl. In July 2006, Ben Stiller announced plans to direct a CBS comedy series starring Taylor, but the series never aired.
She has co-starred with Mandy Moore in both Dedication and License To Wed.
Taylor has since appeared opposite Stiller in three films: Zoolander (2001), Dodgeball: A True Underdog Story (2004), and Tropic Thunder (2008).
In 2010, Taylor guest starred on Hannah Montana.
Taylor married actor, screenwriter, and director Ben Stiller on May 13, 2000. They had met while making the TV show Heat Vision and Jack. They appeared onscreen together in Zoolander, Dodgeball: A True Underdog Story, and Tropic Thunder. They reside in New York City and have a daughter, Ella Olivia, born April 10, 2002, and a son, Quinlin Dempsey, born July 10, 2005. Both have adopted a vegan diet for health reasons.
She is the daughter-in-law of actors Jerry Stiller and Anne Meara.