Peet is the daughter of Penny, a social worker, and Charles Peet, a corporate lawyer. The two are now divorced. Her father is a Quaker and her mother is Jewish. Peet attended Friends Seminary, then studied history at and graduated from Columbia University, where she auditioned for acting teacher Uta Hagen and decided to become an actress after taking Hagen's class. During her four-year period of study with Hagen, Peet appeared in the off-Broadway revival of Clifford Odets's Awake and Sing.
Peet's first screen performance was in a television commercial for Skittles. Her early roles included a guest role on the television series Law & Order, playing a character similar to Patty Hearst. She made her film debut in Animal Room. Peet's first role in a widely-released feature film came in 2000, with The Whole Nine Yards.
Peet married screenwriter David Benioff on September 30, 2006, in New York City and gave birth to a daughter, Frances Pen, on February 20, 2007. After announcing the pregnancy in December 2009, Peet gave birth to her second daughter, Molly June, on April 19, 2010. The family lives in Manhattan and Beverly Hills. Peet was maid of honor at Lauren Holly's marriage in 2001 with Francis Greco.
In 2008, Peet volunteered to be a spokeswoman for Every Child By Two (ECBT), a non-profit organization that advocates childhood vaccination.