Malone was born and raised in the region of Lake Tahoe, Nevada, where she lived until she was 10. She began taking an interest in acting after watching her mother, who was involved in community theatre. She briefly moved to Las Vegas, hated it, and persuaded her mother to move on to Los Angeles. Starting off with music videos and commercials, she made the jump to feature films with the 1996 film Bastard Out of Carolina. She won the Independent Spirit Award for Best Debut Performance and a Screen Actors Guild Award for Outstanding Performance in a TV Movie or Miniseries for this role.

From there, her roles grew in stature, including several Hollywood features. In 1997, she won a Golden Globe for Best Supporting Actress in a TV Movie, for her role in Hope.

After several years of being homeschooled, she briefly attended the Professional Children's School in New York, but did not last long. In January 2000, Malone won legal emancipation from her mother, barring her from interfering with her career and earnings.

Malone was a co-producer for the 2002 film American Girl, a teen comedy which she also acted in. She was due to feature in the film Vinyl, but had to withdraw due to filming conflicts, and was replaced by Michelle Trachtenberg.

She is currently studying photography and living in Lake Tahoe Area.