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Rao attended school at Canossa Convent Girls School and graduated from Sophia College with a psychology degree.

Rao describes her family as a "very conservative family—a traditional, Hindu, Indian family" and herself as very liberal.

The film received positive reviews and earned She received a Stardust Best Actress Award for her performance.

The film received generally mixed reviews from critics, and Rao garnered acclaim for her performance as a Herman's childhood friend Nandini.

The film faced competition from other films such Raaz 2 and Dev D and failed to do well.

Rao had a minor role in Milan Luthria's Deewar; she played Radhika, Gaurang Kaul's love interest. Critical response towards the film was negative, although Rao garnered acclaim for her performance of a school teacher.

Rao co-starred alongside Shahid Kapoor and Sanjay Dutt in the 2005 drama Vaah! Glamsham said the only thing that made the film watchable was the acting of Amrita Rao.

Rao next had a supporting role in the Farah Khan action comedy Main Hoon Na, where she co-starred alongside Shah Rukh Khan, Sunil Shetty, Sushmita Sen and Zayed Khan.

Her role as an army officer's daughter Sanjana (Sanju) Bakshi earned Rao Best Supporting Actress, her second filmfare nomination.

She played Riya, an orphan who lives a middle-class lifestyle in Mumbai and works as an assistant director for a movie producer.

The film received overwhelmingly negative reviews and performed poorly at the box office.

Co-starring alongside Shahid Kapoor, Rao portrayed Poonam, a traditionally raised young woman.

The film was given mixed reviews by most critics but became one of the highest-grossing films of the year, as well as Rao's biggest commercial success to date.

In May 2003, Rao starred with Shahid Kapoor in the coming-of-age romance film Ishq Vishk as a college student.