She studied dance as a girl, and was dancing professionally by the age of 14. Lea then won scholarships to several ballet schools. Being informed by Baryshnikov that she was too stocky, however, she decided to give up dancing in favor of an acting career. She moved to New York at the age of 20, and performed in a number of Burger King ads in the 1980s along with Elisabeth Shue.

Her first significant movie role was in All the Right Moves (1983) with Tom Cruise. That was followed by Red Dawn (1984) and The Wild Life (1984). Her most famous role was that of Lorraine Baines McFly in the Back to the Future trilogy. She also starred in the movies Howard the Duck and SpaceCamp, both considered commercial flops. Lea was nominated for a Cable ACE Award for her outstanding work in "Nightbreaker," and she has been a winner of the People's Choice Award. Lea also received critical acclaim for her work with Farrah Fawcett in "The Substitute Wife."

Thompson found critical and popular success as the star of the sitcom Caroline in the City from 1995-1999. She is also known for playing Alice Mitchell in Dennis The Menace.

In 2005, Thompson starred in a series of made-for-TV movies for the Hallmark Channel in which she plays "Jane Doe", an ex-secret agent turned housewife who helps the government solve mysteries. She also played a guest role on Law and Order: Special Victims Unit, playing a woman who had her eggs stolen.

She is married to film director Howard Deutch. She first met Howard on the set of her first movie, Jaws 3-D (1983). They have two daughters, Madeline and Zoey.