She began her career as a fashion model before landing a role in the short-lived ABC primetime soap opera Paper Dolls in 1984, as well as starring in the romantic comedy film The Sure Thing (1985). She rose to prominence as Paige Matheson on the CBS primetime soap opera Knots Landing (1986–1993), for which she received two Soap Opera Digest Awards.

Thereafter, she appeared in lead roles in numerous television films and miniseries including Lucky Chances (1990), Virus (1995), and The People Next Door (1996). She also appeared in the feature films Noises Off (1992), Spy Hard (1996), Beverly Hills Ninja (1997), and Code Name: The Cleaner (2007).

From 2004 to 2009, Sheridan starred as Edie Britt on the ABC series Desperate Housewives, for which she was nominated for the Golden Globe Award for Best Supporting Actress – Series, Miniseries or Television Film in 2005. From 2018 to 2019, she portrayed Alexis Carrington on The CW's Dynasty reboot.

During the 1980s, she dated teen idols Leif Garrett and Scott Baio. On September 7, 1991, she married actor Harry Hamlin, her co-star from the 1990 TV movie Deceptions. Hamlin filed for divorce on August 21, 1992, listing their date of separation as July 13. From July 1992 to September 1995, she dated singer Michael Bolton. She was then involved for three years with Australian Simon Main, a relationship that ended in 2000 when Main was sentenced to four years in prison for trafficking ecstasy.

She began dating Swedish personal trainer Nicklas Söderblom in 2004 and became engaged to him on New Year's Eve 2004; the pair called off the engagement in October 2005. That December, she rekindled her romance with Bolton. She and Bolton announced their engagement in March 2006 but they broke off their engagement in August 2008. She married Aaron Phypers in December 2015, but the couple separated six months later. Their divorce was finalized in August 2018.