Neuwirth was born in Princeton, New Jersey, the daughter of Sydney Anne, an artist, and Lee Paul Neuwirth, a mathematician. Neuwirth is Jewish and attended the Princeton Day School (New Jersey) of Princeton, but graduated from Princeton High School (a public school) in 1976. She began to study ballet at the age of five, and chose it as her field of concentration when she attended Juilliard in New York City in 1976 and 1977. During this period, she performed with the Princeton Ballet Company in Peter and the Wolf, The Nutcracker, and Coppélia and appeared in community theater musicals.

Neuwirth, who has been associated with the work of Bob Fosse, made her Broadway debut in the role of Sheila in A Chorus Line in 1980. She has been featured in revivals of Little Me (1982) Sweet Charity (1986), for which she received a Tony Award for Best Featured Actress in a Musical, and Damn Yankees (1994). It was with the 1996 revival of Chicago, in which she starred as showgirl and killer Velma Kelly, that she gained her greatest stage recognition. Her performance garnered her Tony and Drama Desk Awards as Best Lead Actress in a Musical.

She appeared in a musical revue, Here Lies Jenny, that featured songs by Kurt Weill, sung and danced by Neuwirth and a four-person supporting cast, as part of an unspoken ambiguous story in an anonymous seedy bar possibly in Berlin in the 1930s. The show ran from May 7, 2004 through October 3 in the Zipper Theater in New York City. Here Lies Jenny was also presented by Ms. Neuwirth in San Francisco in 2005. On December 31, 2006, her 48th birthday, Neuwirth returned to the still-running Broadway production of Chicago, this time in the role of Roxie Hart.

Her screen credits include Green Card, Bugsy, Say Anything..., Jumanji, Summer of Sam, Liberty Heights, Tadpole (for which the Seattle Film Critics named her Best Supporting Actress), The Associate, How to Lose a Guy in 10 Days, Malice, The Big Bounce, The Faculty and Woody Allen's Celebrity.

On television, from 1986 to 1993 Neuwirth played Dr. Lilith Sternin, the conservatively dressed and emotionally repressed psychiatrist who married Dr. Frasier Crane on the hit comedy series Cheers. From the fourth to the seventh season Neuwirth portrayed Lilith in a regular recurring role, and she appeared on the show as a main star from season eight to the final season, season eleven. Like Kelsey Grammer when he started on the show as Frasier Crane, she was not immediately given star billing in the opening credits, but at the end for seasons eight and nine; she appeared in the opening credits with her own portrait in seasons ten and eleven. She auditioned for this role with her arm in a sling, following a fall a week earlier. She won two Emmy Awards for the role, in 1990 and 1991. The character also made an appearance in the series Wings and 11 episodes of the Cheers spin-off Frasier, which earned her a 1995 Emmy Award nomination as Outstanding Guest Actress in a Comedy Series. Her additional small screen credits include a small role on The Adventures of Pete and Pete (episode: The Call), Deadline (2000), Hack (2003), Law & Order: Trial by Jury in (2005), Law and Order: Special Victims Unit in 1999 as a modeling agent/suspect, and again in 2005 as A.D.A Tracey Kibre, as well as the miniseries Wild Palms and an episode of Star Trek: The Next Generation. She has appeared as herself in episodes of Will and Grace, Strangers with Candy and Celebrity Jeopardy!. She voiced as Widow Tweed in The Fox and the Hound 2. In 2009 she co-starred as Ms. Kraft in the remake of Fame.

In 2009, Neuwirth toured a one-woman cabaret show titled: Bebe Neuwirth: Stories with Piano accompanied by pianist Scott Cady. Neuwirth performed songs by Kurt Weill, Stephen Sondheim, Tom Waits, John Lennon & Paul McCartney and John Kander & Fred Ebb. A partial list of the songs performed are: Kurt Weill's "Here Lies Jenny," "Bilbao Song, "Susan's Dream,” "Surabaya Johnny," and "Je Ne T'Aime Pas," Herman Hupfeld’s "As Time Goes By," Stephen Sondheim's "Another Hundred People," (from “Company”), John Kander and Fred Ebb's "And the World Goes 'Round," and “Ring Them Bells” (from “Liza with a Z”), Edith Piaf's "Simply a Waltz," Weill-Ogden Nash "How Much I Love You," Hugh Martin and Ralph Blane’s "The Trolley Song," Frank Loesser "On a Slow Boat to China," Tom Waits' "A Foreign Affair" and "Shiver Me Timbers," Lennon & McCartney’s “Black Bird,” Irving Berlin's "It Only Happens When I Dance With You," and Sammy Fain & Irving Kahal’s "I'll Be Seeing You."

In 2010, she starred on Broadway as Morticia Addams in The Addams Family musical, opposite Nathan Lane who played her husband Gomez.

Her 1984 marriage to Paul Dorman ended in divorce. In May 2009 she married Chris Calkins.

Angela Lansbury (1975) · Donna McKechnie (1976) · Clamma Dale (1977) · Nell Carter (1978) · Angela Lansbury (1979) · Patti LuPone (1980) · Lena Horne (1981) · Jennifer Holliday (1982) · Natalia Makarova (1983) · Chita Rivera (1984) · Bernadette Peters (1986) · Teresa Stratas (1987) · Patti LuPone (1988) · Toni DiBuono (1989) · Tyne Daly (1990) · Lea Salonga (1991) · Faith Prince (1992) · Chita Rivera (1993) · Donna Murphy (1994) · Glenn Close (1995) · Julie Andrews (1996) · Bebe Neuwirth (1997) · Natasha Richardson (1998) · Carolee Carmello / Bernadette Peters (1999) · Heather Headley (2000)

Complete list · (1975-2000) · (2001-present)