Clayburgh was born in New York City to a Jewish family. She attended Sarah Lawrence College, where she decided that she wanted to be an actress. She later joined the Charles Street Repetory Theater in Boston. She appeared in numerous Broadway productions in the 1960s, including The Rothschilds and Pippin.

Her first major film role came in 1972 in Portnoy's Complaint. She was nominated for the Academy Award as Best Actress for 1978's An Unmarried Woman, for which she won the "Best Actress Award" at the Cannes Film Festival, and for 1979's Starting Over. She also received strong notices for her performance in I'm Dancing as Fast as I Can, costarring Geraldine Page.

Her other films include Gable And Lombard (where she played the screen legend Carole Lombard), Silver Streak, Semi-Tough, It's My Turn and First Monday in October.

Clayburgh received Emmy Award nominations for her work in the made-for-television movie Hustling in 1975 and for her guest appearance in the television series Nip/Tuck in 2005. Jill also starred in the made-for-television movie Crowned and Dangerous with Yasmine Bleeth in 1997.

She has been married to screenwriter and playwright David Rabe since 1979. They have two daughters, one of whom is actress Lily Rabe. Some years ago she publicly admitted to having had an abortion.

She is currently (March 2006) appearing on Broadway in Neil Simon's Barefoot in the Park with Patrick Wilson (actor) and Amanda Peet; she plays Peet's mother, a role originated by the late Mildred Natwick.