A graduate of Sydney University law school, she was the first part-time student to win the University Medal in Law. Gaudron was appointed by the Labor government of Bob Hawke. She was admitted to the New South Wales bar in 1968, and was called to become a Queen's Counsel in 1981 (the first female Queen's Counsel in New South Wales).
Gaudron was Deputy President of the Australian Conciliation and Arbitration Commission from 1974 to 1980, and was Chairman of the NSW Legal Services Commission from 1979 to 1980. She was appointed Solicitor-General of New South Wales in 1981 (the youngest ever appointed, and first female solicitor-general of an Australian jurisdiction) and held this office until appointment to the bench in 1987. She was the youngest judge ever appointed in Australia, and the first female High Court judge.
At the time of her retirement as a judge in 2003 at the age of 60 (10 years before her compulsory retirement), Gaudron was the most senior justice on the High Court bench. Despite her seniority, she was overlooked for appointment as Chief Justice in 1998 (the position instead went to Anthony Gleeson), a move which generated criticism of the government of John Howard by various groups, notably Senator Natasha Stott Despoja of the Australian Democrats.
Upon her retirement from the bench, Gaudron has joined the International Labor Organisation in Geneva.