Lynch was born in Golden Valley, Minnesota, the daughter of Barbara, a modern Dancer, and Robert Lynch, a restaurateur. She attended The Guthrie Theater. She worked as a FLIGHT attendant after leaving college. She was working as a model for the Elite modeling agency before acting. She was a good friend of Cynthia Allen Ahl; sister of The Suburbs Guitarist Bruce C Allen. In the 1980s, she studied with acting instructor Sanford Meisner.
After several small roles, Lynch was cast in her breakthrough role in the feature film Cocktail (1988). In 1989, Lynch starred opposite Patrick Swayze in the action film Road House and was nominated for the Independent Spirit Award for Best Female Lead for her performance in the crime drama Drugstore Cowboy, directed by Gus Van Sant. She was also nominated for an Independent Spirit Award for The Beans of Egypt, Maine (1994). She turned down the role of Catherine Tramell in Basic Instinct (1992). Lynch later had leading roles in a number of independent movies and co-starred in several Hollywood feature films, including Desperate Hours (1990), Curly Sue (1991), Three of Hearts (1993), Imaginary Crimes (1994), Virtuosity (1995), Heaven's Prisoners (1996), Mr. Magoo (1997), and Homegrown (1998). In the 2000s, Lynch has had supporting roles in the films Charlie's Angels (2000), Joe Somebody (2001), and The Jacket (2005).
On television, Lynch had the recurring role of Ivan Aycock from 2004 to 2009 in the Showtime drama series The L Word. She later joined the cast of The CW teen soap 90210 (2010–2011) as Laurel Cooper. She returned to cable television with the recurring role of Meg Bannock in Magic City (2012–2013), created by her husband, Mitch Glazer.
