Tyler is the daughter of Steven Tyler, the lead singer of Aerosmith, and Bebe Buell, a model and singer. Having grown up with the understanding that rock star Todd Rundgren was her biological father, she only found out the truth about her parentage at age 11, after noticing that Steven Tyler's daughter Mia Tyler looked like her twin. She then changed her name from Liv Rundgren to Liv Tyler. Liv's mother named her after Norwegian actress Liv Ullmann.

After starting a career as a model, she quickly moved into acting. She first became known to TV audiences when she starred alongside Alicia Silverstone in the Aerosmith music video Crazy in 1994. Later on, having been cast almost simultaneously for Silent Fall and Heavy, the filming of Heavy was delayed until she became available. By the age of 20, she had already starred in several successful movies, including Stealing Beauty, That Thing You Do! and Inventing the Abbotts.

Although it was her appearance in Armageddon (which was released on her 21st birthday) that made her known to a very wide public, she has proven herself in more sophisticated acting challenges such as Onegin (based on the 19th century Russian novel Eugene Onegin by Alexander Pushkin), in which she convincingly portrayed the character of Tatyana Larina, and two movies directed by Robert Altman: Cookie's Fortune and Dr. T & the Women.

Another notable role was her appearance as an endearing graduate student together with Ben Affleck in the Kevin Smith comedy Jersey Girl (2004), which unfortunately bombed at the box office, and was panned almost universally by critics.

On March 25, 2003, she married British musician Royston Langdon of the band Spacehog. On December 14, 2004, she gave birth to a son, Milo William Langdon, in a New York hospital.

Tyler's paternal grandfather was of Italian and German descent. Her other ancestry includes Russian, Native American, German and Norwegian.