Handler was born in the suburban town of Livingston, New Jersey. The youngest of six children, she was raised in Reform Judaism by her Mormon mother and Jewish father. Handler has said that while growing up, she felt like an outsider, telling a reporter, "We lived in this nice Jewish neighborhood...Everyone had Mercedes and Jaguars, and I was going to school in a Pinto.

Handler has performed nationwide as a stand-up comedian, appeared as a regular on the Oxygen Network series Girls Behaving Badly and on other shows, including Weekends at the D.L., The Bernie Mac Show, My Wife and Kids, and The Practice. She is a regular commentator on E! and Scarborough Country as well as a correspondent on The Tonight Show. She hosted the first episode of the reality TV show On the Lot, but quit before the second one was aired, as she later said, "because I smelled the disaster happening before it did." Chelsea Handler hosted "The Chelsea Handler Show" in April 2006, which lasted two seasons. She was a guest on Red Eye Greg Gutfeld and The View; she co-hosted The View on August 2, 2007, and again on September 5, 2008 and hosts her own late night talk show on E! titled Chelsea Lately.

On January 25, 2009, Handler was on the CBS gameshow Million Dollar Password as one of the celebrity players. On April 15, 2009, Handler won the 2009 Bravo A-List Award for "A-List Funny. Handler has authored two books on the New York Times Best Seller List. Handler wrote My Horizontal Life: A Collection of One-Night Stands as her memoir. Handler also wrote Are You There, Vodka? It's Me, Chelsea (ISBN 0-06-117339-8), a collection of humorous essays. Are You There, Vodka hit the NYTimes non-fiction best seller list on May 11, 2008; it has already had a print run of over 350,000.Her third book titled Chelsea Chelsea Bang Bang, was released on March 9, 2010.

In 2007, Handler performed with the Hour Stand-Up Comedy Tour across the U.S.. Her stand-up has been televised on Vh1's Love Lounge, Comedy Central's Premium Blend, and HBO's broadcast of the Aspen Comedy Festival. Chelsea Handler was the host of the Fox show "On The Lot." The show, produced by Steven Spielberg and Mark Burnett, is a competition for aspiring filmmakers who are vying for a chance at stardom. She was replaced after one episode by former Robin & Company entertainment anchor, Adrianna Costa. In July 2007, Handler began starring on her own half-hour late-night comedy series on E! titled Chelsea Lately. This series places Handler against a slew of male-dominated talk shows, and adding a considerable amount of sarcasm and ridicule to the format. On the show's 100th episode, Chelsea revealed to viewers that E! had picked up Chelsea Lately for another 150 episodes. The show has proved a hit and averaged more than a half-million viewers since its premiere (much more than the average for a late night cable program) and has clips on Youtube with more than a million views. All this success is despite the fact that Handler's guests often are not A-list celebrities.

In a 2008 interview Handler said, "The worse the guests are, the more pathetic they are, the funnier the show is." The New York Times reported that Chelsea Lately has been renewed by E! to run until December 2009; Handler received another contract extension in March 2009 to keep Chelsea Lately on the air through 2012. On Monday January 25, 2010 Handler confirmed via her late night talk-show that she had broken up with long time boyfriend Ted Harbert who, as the CEO of Comcast Entertainment Group, oversees E! Entertainment Television.[19] Handler reportedly broke up with Harbert recently after living together for three years but has since cleared up rumors on Chelsea Lately, poking fun at tabloids while insisting to still be with her 'live-in lover'. Chelsea stated that she is "newly single." On another note, Handler has stated in many interviews, her books, and episodes of 'Chelsea Lately' that she has no interest in having children. On the January 29, 2008 episode of Chelsea Lately she claimed she was asked to do season six of the hit television series Dancing with the Stars but declined.

Handler was ranked #91 on the 2009 Maxim Hot 100. She is close friends with Jim Carrey and Jenny McCarthy. Handler appeared on one of two covers of December 2009 edition of Playboy Magazine, the alternate cover featuring Dancing with the Stars semifinalist and model Joanna Krupa. Inside the magazine Handler posed for a non-nude pictorial. Handler may not have ever put it out there as far as posing nude for playboy or taking other offers from other magazines to pose nude.

She has had one wild sex life as her book goes on to explain. It talks about the series of one night stands she had and how often she was never satisfied. The reason is she was never close or ever wanted to get close to any guy but the sexual outlet at first made her feel empowered. She only has really only ever admitted it to a select few but as she continued to have these one night stands she only felt more and more empty. Without having a true connection with any of these guys she could never really fully give herself to anyone therefor never opening up to them. Sure she masked for years telling herself and friend that she enjoyed the crazy life she lived partying and sleeping with new guys almost every other night. Since publishing her book Handler has changed her ways but still often goes out looking for that one night stand.