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 Chapin School of Princeton, but graduated from Princeton High School (a public school) in 1976. She began to study dance 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 Coppelia and appeared in community theater musicals.
Neuwirth 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 voiced Binky in the series CyberChase. In 2004 she mounted a show, 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. This show was performed in the Zipper Theater on W. 37 St. in New York, initially only at 11 p.m. on weekends. It was eventually expanded to include an earlier show. 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. Neuwirth recently did a reading for the upcoming musical adaption of The Addams Family as Morticia opposite Nathan Lane. The show is currently scheduled to debut next year with a 2010 Broadway opening.
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), How to Lose a Guy in 10 Days, The Faculty and Woody Allen's Celebrity.
On television, Neuwirth had a recurring role from 1986 to 1993 as Dr. Lilith Sternin, the conservatively dressed and emotionally repressed psychiatrist who married Dr. Frasier Crane on the hit comedy series Cheers. 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 three short-lived dramatic series, Deadline (2000), Hack (2003) and Law & Order: Trial by Jury in (2005), 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!.