She was christened Dorothy Eloise Maloney. Much of her early career was spent in supporting roles in Grade-B Westerns, although on occasion she had the opportunity to play small but memorable roles, such as that of the young, brainy, lusty, bespectacled bookstore clerk in The Big Sleep, with Humphrey Bogart, in 1946.

In 1956, Malone dyed her hair blonde to co-star with Rock Hudson, Lauren Bacall, and Robert Stack in director Douglas Sirk's melodrama, Written on the Wind. Her portrayal of the dipso-nymphomaniac daughter of a Texas oil baron won her the Oscar as Best Supporting Actress. As a result, she was offered meatier roles in better films, including Man of a Thousand Faces (with James Cagney), Tarnished Angels (again with Hudson and Stack, again directed by Sirk), and The Last Voyage (with Stack).

Malone became a household name when she accepted the lead role of Constance MacKenzie Carson on the ABC primetime serial Peyton Place, on which she starred from 1964 through 1968. Her last notable screen appearance was as a mother convicted of murdering her family in Basic Instinct (1992), with Michael Douglas and Sharon Stone.

Malone was married and divorced three times and has two daughters from her first marriage. Well known in Hollywood to be a heavy drinker, she often came into conflict with film directors and movie moguls alike. Famed actor Richard Widmark walked off a set while filming a picture with her because she showed up to work drunk more times than his patience would allow. During the filming of Written on the Wind she supposedly shot her drunk scene while actually inebriated. Apparently the director didn't realize she was using real alcohol in the props that day. A drunken Dorothy Malone slurred through her lines and staggered around the set and everyone thought she was trying to stay in character, but in reality it was reported she was falling down drunk during most of that film's production.