Hudson was born in Los Angeles, the daughter of Academy Award-winning actress Goldie Hawn and Bill Hudson, an actor, comedian, and musician.Her parents divorced eighteen months after her birth; she and her brother, actor Oliver Hudson, were raised in Colorado by her mother and her mother's long-time boyfriend, actor Kurt Russell. Hudson has stated that her biological father "doesn't know me from a hole in the wall", and that she considers Russell to be her father.Hudson has described her mother as "the woman that I've learned the most from, and who I look up to, who has conducted her life in a way that I can look up to". She has three half-siblings, Emily and Zachary Hudson, from her biological father's subsequent marriage to actress Cindy Williams, and Wyatt, from her mother's relationship with Kurt Russell.

Hudson is of English, Italian, and Hungarian Jewish descent,and was raised in her maternal grandmother's Jewish religion; her family also practiced Buddhism. She graduated from Crossroads, an exclusive college preparatory school in Santa Monica, in 1997. She was accepted to New York University, but chose to pursue an acting career instead of an undergraduate degree.

Hudson's breakthrough was as Penny Lane in Cameron Crowe's Almost Famous (2000), for which she received an Academy Award nomination for Best Supporting Actress and won the Golden Globe Award for Best Supporting Actress - Motion Picture. She had previously appeared in the lesser-known films Gossip, a teenage drama, and 200 Cigarettes, a New Year's-set comedy with a large cast of actors. Regarding her early career and success, Hudson has noted that she is a "hard worker", and did not want to be associated with her well-known parents, wishing to avoid the perception that she "rode on somebody's coattails".

In 2002 she starred in the remake of the historical romance The Four Feathers, a film which was not well received by critics or audiences. Her next film, How to Lose a Guy in 10 Days, a romantic comedy, became a big success at the box office, grossing over $100 million after its February 2003 release. Hudson subsequently appeared in several romantic comedies, including Alex and Emma and Raising Helen; the films met with varying degrees of success.

Hudson headlined a thriller called The Skeleton Key in 2005. The film, which had a production budget of $43 million, enjoyed box office success, grossing over $91.9 million worldwide ($47.9 million in North America). Her later film, a comedy titled You, Me and Dupree and co-starring Owen Wilson and Matt Dillon, grossed $21.5 million on its opening weekend of July 14, 2006.

In 2007 Hudson directed the short film Cutlass, one of Glamour magazine's "Reel Moments" based on readers' personal essays. Cutlass co-stars Kurt Russell, Dakota Fanning, Virginia Madsen, Chevy Chase and Kristen Stewart.

In 2008, she appeared in Fool's Gold, a romantic comedy released on February 8th, and her second film to co-star Matthew McConaughey. She had been certified in scuba diving in the Great Barrier Reef for the movie's underwater scenes. Her latest film, another romantic comedy, titled My Best Friend's Girl, was released in September.

Hudson next appeared in the musical film Nine, alongside Daniel Day-Lewis, Marion Cotillard, Penelope Cruz, Nicole Kidman and Judi Dench. The film, directed by Rob Marshall, was released in December 2009. Hudson was critically acclaimed for her unknown dancing skills, showcased in a stylish 60's inspired original piece called "Cinema Italiano", which was written specifically for the film and for Hudson's character.

She recently starred in the film adaptation of Jim Thompson's The Killer Inside Me. The film premiered on January 24, 2010 at the Sundance Film Festival.

2009 Nominated MTV Movie Award Best Fight for: Bride Wars (2009)

2009 Nominated Razzie Award Worst Actress for: Fool's Gold (2008/I)

2009 Nominated Teen Choice Award Choice Movie Actress: Comedy for: Bride Wars (2009)

2009 Nominated Teen Choice Award Choice Movie Hissy Fit for: Bride Wars (2009)

2009 Nominated Teen Choice Choice Movie Rumble for: Bride Wars (2009)

2007 Nominated Teen Choice Award Choice Movie Actress: Comedy for: You, Me and Dupree (2006)

2004 Nominated Teen Choice Award Choice Movie Actress - Comedy for: Raising Helen (2004)

2003 Nominated MTV Movie Award Best Female Performance for: How to Lose a Guy in 10 Days (2003)

2001 Nominated Oscar Best Actress in a Supporting Role for: Almost Famous (2000)

2001 Nominated American Comedy Award Funniest Supporting Actress in a Motion Picture for: Almost Famous (2000)

2001 Nominated BAFTA Film Award Best Performance by an Actress in a Leading Role for: Almost Famous (2000)

2001 Won Blockbuster Entertainment Award Favorite Female - Newcomer for: Almost Famous (2000)

2001 Nominated Teen Choice Award Film - Choice Actress for: Almost Famous (2000)