She was born in New York, New York, to writer/producer Naomi Foner and director Stephen Gyllenhaal (pronounced "Jill-en-hall"). She has a younger brother Jake, who is also an actor. Both of them attended Columbia University; she graduated in 1999.
Her film roles before were directed by her father: Waterland (1992), A Dangerous Woman (1993), and Homegrown (1998). She was in Cecil B. DeMented (a film by John Waters), and co-starred with her brother in Donnie Darko in 2001.
Her break-out role was in Secretary, which earned her a number of nominations and awards. She has followed up with roles in Adaptation, John Sayles's Casa de los Babys and Mona Lisa Smile.