Byrne was born in Balmain, a suburb of Sydney, Australia, of Irish and Scottish descent (her grandfather was an Irish immigrant to Australia). She is the daughter of Jane, a primary school administrator, and Robin Byrne, a semi-retired statistician and market researcher. She is the youngest of their four children; she has an older brother, George, and two older sisters, Alice and Lucy. Both of her parents are atheists, and she describes herself as agnostic. Byrne attended Balmain Public School and Hunters Hill High School before attending Bradfield Senior College in Crows Nest. She began taking acting classes at age eight, joining the Australian Theatre for Young People and later attended the University of Sydney. In 1999, Byrne studied acting at the Atlantic Theatre Company developed by David Mamet and William H. Macy.
Byrne was cast in her first film role, Dallas Doll, when she was 13 years old. She has appeared in several Australian television shows including Heartbreak High and Echo Point, and the film Two Hands with Heath Ledger. She appeared in The Date, My Mother Frank, and Clara Law's The Goddess of 1967 for which she was award the Volpi Cup for "Best Actress" at the 2000 Venice Film Festival. She appeared as a guest in an episode of the police drama series Murder Call. On stage, she played a lead role in La Dispute and in a production of Anton Chekhov's classic Three Sisters at the Sydney Theatre Company.
In 2004, Byrne starred as Briseis, the Trojan priestess who is abducted during the Trojan War by Achilles, played by Brad Pitt, in Wolfgang Petersen's epic Troy, also starring Eric Bana, Peter O’Toole, Sean Bean, and Orlando Bloom. She then reunited with Peter O'Toole in the BBC TV drama Casanova. Byrne appeared with Snoop Dogg in Danny Green's film The Tenants, based on Bernard Malamud's novel, and starred with Josh Hartnett and Diane Kruger in the romantic psychological thriller Wicker Park where she played Alex, the woman who manipulated Josh Hartnett's character to keep him apart from the woman he falls in love with.
In 2007, she played Cassie, the pilot in Danny Boyle's science fiction suspense film Sunshine, Scarlett Ross, an army medical officer in Juan Carlos Fresnadillo's science fiction horror 28 Weeks Later, the sequel to Boyle's 28 Days Later, and appeared in the independent film Just Buried, a Canadian dark comedy written and directed by Chaz Thorne.
Since 2007, Byrne has appeared in the FX drama production Damages, playing the regular lead role of Ellen Parsons, a young attorney torn between her new boss, played by Glenn Close, and her own ambitions.
In 2009, Byrne co-starred with Nicolas Cage in the science fiction thriller, Knowing. Later that year, she appeared in the indie film, Adam, with Hugh Dancy. She appeared in the 2010 comedy film, Get Him to the Greek, starring Russell Brand and Jonah Hill and she was joint lead in the James Wan horror film Insidious, which premiered in September 2010 at the Toronto International Film Festival and went on general release on 1 April 2011.
Byrne has appeared in the music videos for Darren Hayes's single "I Miss You", M.Craft's "Sweets", and starred with Australian musician Alex Lloyd in the music video for his single "Black The Sun", as well as featuring on the cover artwork for the EP. She also appeared in a television commercial for Sony.
Byrne was the face of Max Factor between 2004 and 2006 and named in the Most Beautiful People of 2007 list in Who Magazine.