Nielsen reached the height of her fame in 1987, when she played the assassin Karla Fry in Beverly Hills Cop II. She became famous for her love life as well, marrying actor Sylvester Stallone (her co-star in Rocky IV and Cobra), then becoming engaged to American football player Mark Gastineau, with whom she had a son. Nielsen has three more children by two of her four ex-husbands, photographer/director Sebastian Copeland (Orlando Bloom's cousin), and actor Raoul Meyer.

Nielsen started a short-lived music career shortly after her divorce from Sylvester Stallone in 1987. She released her debut album "Every Body Tells A Story" in that year and recorded with Austrian pop sensation Falco. "Body Next To Body" went to #22 in Germany and #6 in Austria. She released a follow-up album in 1992, although it was also not a success.

In the 1990s, she hosted an English-language talk show that was broadcast across Europe, to much acclaim. The show revived public interest in Nielsen and helped her brush off the misconception that she could only be known for her beauty.

She appeared on the third season of the VH1 reality show The Surreal Life, which was filmed in July and began airing in early September 2004. In the show, Nielsen was seen flirting with Public Enemy rapper Flavor Flav and it was confirmed that they were a couple, even though she was still legally married to Raoul Meyer. The show was such a success, due mainly to the interplay between the unusual couple, that VH1 produced a spin-off reality show called Strange Love, which began airing on the channel on January 9, 2005.

Nielsen also appeared with Flav on the VH1 Big in '04 Awards.

In January 2005 she appeared in the UK TV programme Celebrity Big Brother along with her former mother-in-law Jackie Stallone and the writer Germaine Greer.

Nielsen married for the sixth time in March 2005 to 26 year old Italian barman Mattia Dessi, who appeared briefly on Strange Love. The marriage is not official, because her divorce from her previous husband is not finalized.