Born in Oxford to a Jewish family of Belarusian origin, Margoyles attended the local Oxford High School. She then attended Cambridge University where she began acting in her 20s, in productions by the Gay Sweatshop company. The grey-haired, heavy-set actress is one of Britain's most sought after supporting players, and has appeared in a number of successful feature films.

Originally, it was her work as a voice artist that brought her into the public consciousness. She voiced the female rabbit character in the animated commercials for Cadbury's Caramel, and performed most of the supporting female characters in the dubbed Japanese action TV series, Monkey.

Margolyes' first major role in a film was as a character called Elephant Ethel. She has since become a familiar face in the world of film and television.

Margolyes received critical acclaim for her portrayal of Flora Finching in the 1988 movie, Little Dorrit. In 1993, she won a Best Supporting Actress, BAFTA for her role as Mrs. Mingott, the only comic relief in Martin Scorsese's The Age of Innocence, a performance which jump started her career. Margoyles then started to get notcie from a much younger audience when she starred in James and the Giant Peach as Aunt Sponge, even though she also done the voice as the Glow Worm in the same movie. Then she starred as another well known character from a book as Professor Sprout in Harry Potter and the Chamber of Secrets.

Margolyes was recently seen alongside Geoffrey Rush and Charlize Theron in The Life and Death of Peter Sellers, and Annette Bening, Jeremy Irons and Michael Gambon in Being Julia (as Dolly de Vries), Margolyes also featured as Dorcas the housekeeper in Ladies in Lavender with Dames Judi Dench and Maggie Smith, and cropped up in a guest role in ITV mystery drama Miss Marple, a new series transmitted in the UK in 2004, and featuring Geraldine McEwan in the title role.