Diaz was born in San Diego, California, the daughter of Billie (née Early), an import-export agent, and the late Emilio Diaz, who worked for UNOCAL a California oil company as a Field Gauger and in the pipeline department for twenty plus years until he retired in 1998. Her father is a second-generation Cuban American and her mother is of English, German and Cherokee Native American ancestry. She has one older sister, Chimene (born 1970). She attended Long Beach Polytechnic High School at the same time as rapper Snoop Dogg.
At 16 she began her career as a fashion model. Diaz signed with top modeling agency Elite Model Management. After graduating from high school, she went to work in Japan and met video director Carlo de la Torre. On her return to America, she moved in with him. For the next few years, her modeling took her around the world, working for contracts with major companies. She modelled for designers such as Calvin Klein and Levi's. She also graced the cover of the July 1990 issue of Seventeen magazine.
At 21, Diaz auditioned for The Mask. Even though she had no previous acting experience, after obtaining the lead female role, she immediately started acting lessons. Over the next three years, she won roles in low-budget, independent films, such as The Last Supper, Feeling Minnesota, and She's the One. She then regained mainstream success with her roles in My Best Friend's Wedding and There's Something About Mary, a film for which she was nominated for a Golden Globe for in the category of Best Actress - Musical or Comedy. She won critical acclaim for her performance in Being John Malkovich, which earned her Best Supporting Actress nominations at the Golden Globes, the BAFTA Awards and the SAG Awards.
During the 1999-2000 period, Diaz starred in many films, such as Things You Can Tell Just by Looking at Her, A Life Less Ordinary, Any Given Sunday, and the hit adaptation of Charlie's Angels. In 2001, she won nominations for Best Supporting Actress at the Golden Globes, the SAG Awards and the AFI Awards for Vanilla Sky, and also voiced Princess Fiona in Shrek, for which she earned $10 million. In 2003, Diaz received another Golden Globe nomination for Martin Scorsese's epic Gangs of New York, and became the second actress (after Wedding costar Julia Roberts) to earn $20 million for a role, receiving the sum for Charlie's Angels: Full Throttle. After Full Throttle, Diaz only appeared in three films, Shrek 2, In Her Shoes and The Holiday . During 2004 and early 2005, Diaz explored some of the planet's environmentally unique locations while discovering ways to help preserve them for the 10-episode MTV series Trippin' which featured numerous celebrities and friends of Diaz, such as Jessica Alba, Drew Barrymore, Mark Hoppus, Eva Mendes and Justin Timberlake.
Diaz returned to the screen for Shrek the Third in 2007, where she co-stars with former boyfriend Justin Timberlake. She was set to team up again with The Mask co-star Jim Carrey in the film Fun with Dick and Jane, but dropped out to star in In Her Shoes. She will also appear in Shrek 4 and in the romantic comedy What Happens in Vegas, opposite Ashton Kutcher. She is also set to star in The Box, a horror thriller in 2008 co-starring James Marsden.
On July 7, 2007, Diaz participated at Live Earth in New York by introducing Bon Jovi and The Police. In 2007, People ranked her as the Best Dressed Female Celebrity.
Diaz dated actor Matt Dillon from 1995 to 1998. She is also the ex-fiancée of actor/musician Jared Leto. They had a low-profile relationship from 1998 to 2002. Reports have said that they broke up because Diaz was concentrating more on her acting as Leto was more concerned about his band.
Most recently, Diaz dated former *NSYNC member Justin Timberlake, whom she met at the Kids' Choice Awards in 2003. The pair issued a joint statement on January 11, 2007, announcing they had broken up, following weeks of breakup rumors.
In October 2004, Diaz and Timberlake were in an altercation with a tabloid photographer outside a hotel. When the photographer and another man tried to photograph them, the couple snatched the camera. Pictures of the incident appeared in US Weekly. Representatives for the pair claimed that they were "ambushed" and acting out of self-defense.
Diaz has publicly admitted that she has obsessive-compulsive disorder, is deeply germophobic and habitually rubs doorknobs so hard before opening doors to clean them that the original paint fades afterwards. She says she washes her hands and floors "many times" each day and uses her elbows to push open doors. Diaz commented on her progress with the disorder on May 10, 2007, saying, "I think I've made my peace with it".
Diaz received "substantial" defamation damages from suing American Media Incoporated, after The National Enquirer had claimed she was cheating on then-boyfriend Timberlake. Diaz also sued successfully to stop the publication of bondage-themed nude photos taken of her before she became famous.
When Diaz was asked if she can speak Spanish she said:
I go, "God, you know, it all sounds so familiar. I know what you're saying, I really do. I just cannot respond to you back in Spanish. I can barely speak English properly." I didn't grow up in a Cuban or Latin community. I grew up in Southern California on the beach, basically. And I'm third generation. I'm of Cuban descent, but I'm American.
Diaz is currently represented by Creative Artists Agency.
In September 2004, Diaz created some controversy after her appearance on The Oprah Winfrey Show. The show in question, concerned celebrities encouraging young people to vote in the upcoming Presidential election. While Diaz was sitting next to her Charlie's Angels co-star Drew Barrymore, singer Christina Aguilera, and hip-hop mogul Sean "Diddy" Combs, Diaz gave the ominous warning "Women have so much to lose. I mean, we could lose the right to our bodies. We could lo--if you think that rape should be legal, then don't vote. But if you think that you have a right to your body, and you have a right to say what happens to you and fight off that danger of losing that, then you should vote." Several pundits like talk show host Laura Ingraham alleged that Diaz was trying to disguise her scare tactic-like statement as another way of saying that if you didn't vote for Democratic challenger John Kerry, a victorious President George W. Bush would somehow try to ban the right to have a legal abortion. The actress was vocal in her support for Al Gore in 2000. Diaz went so far as sporting a t-shirt that read "I won't vote for a son of a Bush!" while making publicity for Charlie's Angels.
On April 15, 2008, her father, Emilio Diaz, died of pneumonia, aged 58.